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Macro Economics > Exam 1 > Flashcards

Exam 1 Flashcards

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1
Q

Microeconomics

A

Part of economics concerned with single factors and the effects of individual decisions

Individual

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2
Q

Macroeconomic def

A

Part of economics concerned with large scale or general economic factors
Like interest and national productivity

Large scale

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3
Q

Positive economics is

A

Object and fact based

Statements can be tested, proved, disproved

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4
Q

Normative economics is

A

Subjective and value based

Statements are opinion based

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5
Q

Demand variables

What are they

A 
Desires
Scarcity 
Opportunity cost
Marginal cost 
Priorities
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6
Q

Law of demand

A

There is an indirect relationship between the price of a product and the quantity demanded

Inverse relationship of P and Q demanded
One increase other decrease

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7
Q

Determinant of demand

A

Population
Income
Taste and preference
Price of substitutes and complements

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8
Q

Demand shifts

A

Shift left is decrease

Shift right is increase

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9
Q

5 factors of production

A 
Land 
Labor
Capital 
Entrepreneurship
Knowledge
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10
Q

Exchange theory:

Voluntary

A

Exchanges

Voluntary Transaction

Gift/credit exchange

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11
Q

Voluntary transaction

A

Both people benefit
D+ +D

Both benefit

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12
Q

Gift/credit exchange

A

D+ +D

(Future return)

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13
Q

Involuntary exchange

A

Force

Fraud

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14
Q

Forced exchange ex)

A
  • (“). (“)+
    - S —————> +D

Forced to give

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15
Q

Fraud exchange example

A

+D

Someone gives faulty check to buy car

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16
Q

Opportunity cost

A

The next best thing you must give up to get something else

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17
Q

Law of supply

A

Direct relationship between price and quantity supplies

Direct relationship between price and quantity

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18
Q

Profit equals

A

Revenues - expenses

P= R-E

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19
Q

Price - cost =

A

Profit if positive

Loss if negative

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20
Q

Rising cost would mean

Lowering cost would mean

A

Supply would go down
Shift left

Supply would go up
Shift right

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21
Q

Surplus is when

A

The new shift in supply or demands is above the new equilibrium created

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22
Q

Shortage when

A

New supply or demand shift is under the new created equilibrium

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23
Q

Economic spectrum

A

Pure market economy

Mixed economy

Pure command economy

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24
Q

Pure market economy (PME)

Study These Flashcards
A

Zero percent govt control

25
Pure command economy
100 percent government control
26
Government interventions
Subsidies and taxes Quantitative restrictions Quota and license ``` Price control Legal max (ceiling) legal min (floors) ``` Prohibition and compulsions Black market
27
Subsidies and taxes cause
Shifts in demand or supply
28
Quantitative restrictions are
Quotas and requiring licenses It raises prices artificially
29
Price control example
Legal max is called ceiling Legal minimum is called floor
30
Prohibition and compulsion causes
Black markets Caused by laws and regulations
31
What happens in 1919 for Us wheat and farmer
1918 is the start of ww1 and during the war the demand of US wheat increased Shifted demand right
32
What happen in 1919 for us wheat and farmer
Ww1 end
33
What happen in 1920 for us wheat and farmer
Improvement in farm productivity because of improved technology after war Shifts supply right
34
What happens in 1929 in us wheat and farm
Hoover implements farm stabilization act to restore golden era (1914) by otherizing purchase of wheat People have no money to purchase cause depression Fails
35
What happen in 1933 for us wheat and farmer
Agriculture adjustment act with FDR USDA- implements Storage of wheat, pay farmers not to grow, paid to destroy In order to drive prices of wheat up 1950 solid banks (mandatory)
36
Winners and losers of wheat and farming
Winner Farmer, govt agency, storage comp., farm equipment comp, politician Lose Consumer Taxpayer
37
Farm bill | Cause
Storing Destroying Pay not to produce Ban import
38
Congress has what inside it
Senate 100 (2 each state) HoR 435 Congress 535 electoral votes
39
What are the 5 lobbying effects
Senate effect House effect Seniority Special interest Logrolling
40
Senate effect | Is what
Ex) NY pop 1000 gets 2 vote for senate KS + C pop 500 gets 4 votes for senate Urban city are out represented then rural areas Therefore more effected lobbying of rural place
41
House effect
Ex) Kansas Four district 1 urban 3 rural Urban more pop then all 3 rural combined Urban gets 1 vote compared to 3 rural farm district Move to diff city vote don't change
42
Seniority what is
Seniority How much time you were in office Get more power cause more known Urban- many changes in city, no seniority build up (nobody know) No re elected Rural- less change in rural, so seniority advantage (people know you) re elected
43
Special interest what is
Politician raise price 1 cent to wheat bread ( promise to farmer to get vote) --> consumer many buy --> increase food tax ---> becomes subsidies to farmers ---> farmers give some of earning to politicians as campaign contribution
44
Logrolling what is
It is when a politician puts Your interest in my bill if you vote for me You scratch my back I scratch yours
45
NYC 1937
Birth of the medallion system
46
Medallion system what is
It puts a quota to how much taxi there can be in the city or area Cost really cheap at first-- like 10 dollar per --- but now it can sell to 1 million per medallion
47
What did medallion system do?
Caused a quota to cabs driving Raised price for consumers Some consumer lost service cause of price
48
Who win and lose
Win Original can owner, govt agency (enforce rule, bigger budget), alternative transportation (people not ride cab), banks (get business bc of calaterall from cab owner) Lose Consumer (pay more-high income, lose service-low income), potential owner (get alt employment, be gypsy), taxpayer of medallion
49
Washington have no medallion system | Soo
Lower price Easy to get in and convenient Easy for new comer to join job Ownership by ethnicity change (diverse) NYC IS OPPOSITE high price Hard to get in Hard for new Ownership by same person
50
Medallion and banks
Owner give medallion to bank as callateral Banks give owner money (loan) You do some big project and get the title back
51
Iron triangle what is
Special interest group: taxi owner Taxi owner -- give money--> politician --> give taxpayer money to govt agency --> enforce bill and give benefit to taxi owner
52
What happens if wage increases to labor
If wage goes up there is more unemployment Which is a surplus supply of workers A lot of potential workers but little demand bc of higher medium wage
53
Minimum wage causes a
Legal min on the graph It puts a floor
54
On graph of minimum wage increase
There is a legal min Surplus of unemployed Workers who keep jobs at higher wage are to the left Potential workers are to the right
55
Employees who keep job at higher wage have what characteristics
``` High Performance Productivity Education Experience Likely to keep men Older Seniority ```
56
Employees who let go or not hired sat lower wage have what characteristics
``` Low Performance Education Experience Less seniority Younger Diff ethnicity Women ```
57
Walter Williams case study
Employee a and employer b A com and B comp 6/hrs and 8/hrs W+M and just M Product A and Product B Cheaper and more expensive Consumer purchase A
58
S Africa study is what
1 skilled worker can be hired over 3 unskilled workers because of minimum wage Pay 50 for good Or pay 17x3 51 for unskilled Minimum wage rise Skilled guy keep job without fear to loosing for unskilled
59
Career ladder what is
People are usually paid on job to get skills to move up the career ladder 1-10 Some people who pay school to get skills get directly higher on the career ladder 10

Macro Economics (2 decks)

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