Exam 1 Flashcards
(36 cards)
What are correlations?
When two variables seem to be interdependent without having an
obvious explicit link. Variable X and variable Y inexplicably move in
the same or opposite directions
What is a positive correlation?
A positive correlation occurs when a variable moves in the same
direction as another variable.
What is a Causation?
When a variable has a direct and explicit impact on another
variable. Variable X causes variable Y to change
What is an index?
Compares the current value of a variable with the value of that
same variable at a base year
What is the equation for an index?
Index =
πΆπ’πππππ‘ ππππ’π ππ ππππππππ
π΅ππ π ππππ’π ππ π ππππππποΏ½
what is a time series graph?
Time-Series Graphs have time on the x-axis; shows progression
over time
What is a cross sectional graph?
Cross-Sectional Graphs have individuals on the x-axis; shows
comparison between individuals
What is a scatter graph
Scatter Graphs have variables on the x-axis and the y-axis; Each
point is an individual
Explain the circular flow of expenditures
Money flows from the goods market to producers to the factor market to consumers and back around again
What are Resources is economics
In Economics, they refer to inputs of production. They are used to
produce final products (for consumers)
What is the Production Possibility
Curve (PPC)?
Cartesian graph showing all the possible combinations of
production given the available resources; Also called PPLine,
PPBoundary, PPFrontierβ¦
define Globalisation
International movement of inputs and outputs of production.
Exchanges at a global level
Name 3 different economic systems
Free-Market Economy, Planned Economy, Mixed Economy
What is a free market economy?
Often referred to as Capitalism. Fully decentralised decisions in
which individualsβ self-interests can be the basis for production
What is a Planned Economy?
Often referred to as Communism. Fully centralized decisions in
which a central agency (the government) makes all production related decisions
What is a Mixed Economy ?
In real-life, economies have a mix of characteristics from both FreeMarket and Planned economies
What is a Aggregate?
The sum of individuals. In Macroeconomics, the aggregate is used
to represent the total of all individuals in an economy
What is National Production?
Referred to as the production of new goods and services,
including the transformation of existing products. The most
common synonyms are: Output, GDP, National Income
What are business cycles?
Output growing or shrinking over a short period of time. Also
referred to as Short-Run Growth
What is Actual Output?
Production of the country at any given year. It is what the
country is producing this year
What is potential output?
Production of the country when all economic variables are
βnormalβ or βusualβ. It is what the country would have normally
produced this year
What is an output gap?
Difference between actual output and potential output. It shows
the business cycles
What are the two types of output gaps?
Positive output gap is when actual is higher than potential
output. Also called an inflationary gap
/Negative output gap is when actual is smaller than potential
output. Also called a recessionary gap
What is the Measure of Business
Cycles?
A business cycle is defined as the amount of time in which there
is a positive or negative output gap directly followed by the
reverse output gap. It generally contains no more than three
points of no output gaps
