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Macro Economics > Finnal > Flashcards

Finnal Flashcards

(63 cards)

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0
Q

Asset

A

Something of value

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1
Q

Money

A

Object we use in order to exchange for something we want

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2
Q

Liability

A

Debt owed

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3
Q

Barter

A

Negotiate with someone for an exchange without money

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4
Q

4 functions if money

A
  1. Money used as a medium of exchange
  2. Keeps records strait
  3. Store of value
  4. Used to differ payment (can pay something later)
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5
Q

Federal reserve system

A

Central bank of the USA, controls all banks in USA

  • sets interest rates
  • loans money to the banks
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6
Q

2 ways to measure money

A
  1. M1: deals with all cash on demand, currency’s, cash, checking accounts travelers checks coins (valued around 2 trillion)
  2. Consists of M1( 2 trillion) + savings (7 trillion) = 9 trillion
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7
Q

Monetary policy

A

The government strategy to manipulate interest rates and supply of money to slow or speed up the economy

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8
Q

Fiscal policy

A

How the gov. Manipulate taxes and spending in order to manipulate the economy

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9
Q

Prime rate

A

The best interest rate banks loan to there best customers

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10
Q

Velocity of money

A

How long does a dollar stay in a community

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11
Q

Goals of price stability

A
  1. Foster price stability
  2. Improve employment
  3. Introduce stability in financial markets like banks
  4. Motivate economic growth
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12
Q

Demand schedule

A

As interest rates go up, demand for money goes up. As interest rates go down demand for money goes down

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13
Q

Things that move demand schedule to the right

A

1 more borrowers
2 higher income
3 higher longevity
4 GDP strong

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14
Q

Exspmtionory monetary policy

A

Tries to increase GDP by

  1. Lower interest rates
  2. Increase money supply
  3. More loan-able money
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15
Q

Contractionary military supply

A

Slow down the economy make GDP smaller

  1. Increase interest rates
  2. Restrict money supply
  3. Make loans very hard to obtain/ non loan- able
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16
Q

3 strategies how gov. Taxes to expand economy

A
  1. Reduce tax, when you reduce tax DI goes up ( PI - taxes= DI)
  2. Increase gov. Spending
  3. Set the environment where buiessness want to spend more money
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17
Q

Contractionary fiscal policy to slow down economy

A
  1. Raise tax
  2. Lower gov. Spending
  3. Demotivate private companies from investing
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18
Q

Crowding out

A

As gov. Spending goes up, private investments go down and vise versa.

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19
Q

Budget deficit

A

Revenues are less than expeditiures

BD=R>Exsp.

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20
Q

Budget surplus

A

R> Exsp.

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21
Q

Philips curve

A

Shows how unemployment and inflation are connected, both short term and long term

Short: as inflation goes up, unemployment goes down and vise versa.

Long: does not effect will always be at natural unemployment ( 4-5%)

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22
Q

Open economy

A

An economy that trades with other countries

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23
Q

Closed economy

A

An economy that doesn’t trade with other countries

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24
Balance of trade
the difference in value between a country's imports and exports.
25
Trade surplus
TS = exports > imports
26
Trade deficit
Imports > exports USA in a trade deficit becouse of Japan and china
27
Currency appreciation
Look at our currency compairs to others- currency value goes up
28
Currency depreciation
Our currency goes down in value compared to other countries
29
International financial system
Deal with other countries and other currency's because we are in a global market. When your currency is better its is good
30
Universal currency (dollar)!
Every one wants the dollar because it is the most valuable currency
31
PPP ( purchasing power parody)
Make sure currency is stable, and valuable so products can be bought at a consistent price.
32
Tariffs
Taxes on imports
33
Quotas
Minimum or maximum imports if a product
34
Embargo
Forbidding the purchase of another countries product
35
Protectionism
No trade with other countries - argument to save jobs - protect our wages - protect new it infant economies from competition from other countries - national security
36
Economics
How a society uses scarce recourses to satisfy unlimited wants and needs
37
Micro economics
The study of individuals and markets, family's , companies ( individual components of am economy)
38
Macro economics
Deals with economy as a whole where we evaluate unemployment, inflation, income ect.
39
Opportunity cost
Wen decisions are made a price is paid
40
Questions asked when making decisions with scarce resources
1What are we going to make? 2How are we going to make it? 3For whole will we make it?
41
1 Productive, 2 efficient 3 effective
1 effective and efficient are done together 2 do many things 3 do things correct
42
Cetrerus Parabus
Everything stays the same but one or two variables
43
Positive economics
Factual economics statement
44
Normative economics
Opinion based economic statement
45
Resources
Land Labor Capital ( not cash) Entrapanurial
46
Profit
Sales - cost
47
Profit maximization
P and S as big as posable C as small as posable or MC = MR
48
Trade offs
Give something up to gain something else
49
Specialization
A country can do something better than other countries
50
Comparative advantage
Opportunity cost is lower , can do something easier than competitor
51
Absolute advantage
Make a product with less recourses than another manufacturer
52
Circular flow of money
Market---> households----> product----> firm and vise versa
53
Law of supply
As price goes up supply goes up as price goes down supply goes down
54
Law of demand
As price goes up demand goes down ad price goes down demand goes up
55
4 economic products
1. Substitute 2. Complement 3. normal 4. Inferior
56
Substitute product
Buy product A or B
57
Complement product
2 products that go together, one effects the other
58
Normal product
Follows laws of supply and demand
59
Inferior product
Cheep product bought because we cant afford normal products
60
Price ceiling
The highest price that can be charged but must be below market equilibrium price
61
Consumer surplus
What your willing to pay vs. what your acctualy paying
62
Producer surplus
Difference between the lowest price your willing to do the job for and the market price

Macro Economics (5 decks)

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