Macro

Question 1

Planned obsolescence

Answer 1

Take streamlined products, phase when they come out, can predict profits

Question 2

What are the two types of fiscal policy and what are they?

Answer 2

Contractionary- raise taxes, cut spending

Expansionary- cut taxes, increase spending, create surplus

Question 3

Neo- classical

Answer 3

Promote no gov. Intervention

Question 4

Keynsian

Answer 4

Promote gov intervention (doesn’t take into account power gov gets from doing this)

Question 5

Administrative Barriers

Answer 5

Bureaucracy, environmental regulations, embargoes, nationalistic campaigns

Question 6

Costs of inflation (SILLI U)

Answer 6

Loss of purchasing power, effect on saving, effect on interest rates, effect on international competitiveness, uncertainty, labor unrest

Question 7

Costs of deflation (ECU)

Answer 7

Unemployment, effects on investment, cost to debtors

Question 8

Monetarism

Answer 8

Classical idea that you can control inflation and deflation by controlling the money supply

Question 9

Absolute Poverty

Answer 9

Those living on less than approx 2$ day or less

Question 10

Relative Poverty

Answer 10

Living on a lower wage than the rest of the country

Question 11

Why do countries trade

Answer 11

Can obtain lower prices, greater choice, differences in resources, economies of scale, increased competition, more efficient, scarcity of foreign exchange

Question 12

World Trade organization

Answer 12

Administer trade agreements, trade forum, handle disputes

Question 13

Arguments for protectionism

Answer 13

Protecting domestic employment; against low cost labor, infant industries, avoid over specialization, strategic reasons, prevent dumping, protect product standards, raise government revenues, correct balance of payment

Question 14

Arguments against protectionism

Answer 14

Created higher prices, less choice, reduced competition and innovation, reduced efficiency and specialization, hinders growth

Question 15

FOREX

Answer 15

The foreign exchange market- where currency and exchange rates are obtained

Question 16

WBO

Answer 16

World Bank Organization- does banking for these IMF/WTO

Question 17

WBO jobs (HAT)

Answer 17

Handle disputes, administer trade agreements, trade forum

Question 18

LRAS; Long run aggregate supply

Answer 18

There is a certain degree of planning that takes place, technology can change during this longer time period and firms can he access to more FOPs, a time long enough for all factors to he variable

Question 19

Determinants of PED (SDT)

Answer 19

Number and closeness of substitutes, degree of definition, time period

Question 20

Direct tax

Answer 20

A tax upon income, it directly taxes wages, rent, interest, and profit

Question 21

Indirect tax

Answer 21

An expenditure and sales tax upon goods and services, it is collected by sellers and passed on to governments

Question 22

Short run

Answer 22

When prices of final goods and services change, but factor prices do not

Question 23

Demand deficient or cyclical unemployment

Answer 23

Unemployment caused by business cycle where the slowdown in economy activity with falling aggregate demand is the cause of unemployment

Question 24

Frictional unemployment

Answer 24

Unemployment as a result of leukopenia who are between jobs. It often takes time for workers to find jobs, even though there are jobs. It is often seen as a healthy for an economy to have workers move into areas of need.

Question 25

Structural unemployment

Answer 25

Unemployment caused by a change in the demand for skills as the nature or structure of the economy changes. So there is a mismatch between qualifications, skills and characteristics of the unemployed and available jobs.

Question 26

Seasonal unemployment

Answer 26

Unemployment associated with industries or regions were the demand for labor is lower at certain times of the year

Question 27

Natural unemployment

Answer 27

Unemployment resulting from a situation where there is no cyclical unemployment, only structural, frictional and seasonal. The rate of full employment where demand for labor equals the supply of labor.

Question 28

Inflation

Answer 28

The sustained upward movement in the average level of prices

Question 29

Demand pull inflation

Answer 29

Inflation induced by a persistence of an excess of aggregate demand in the economy over aggregate supply

Question 30

Cost push inflation

Answer 30

The situation in an economy where there is sustained price rises because of production costs increasing

Question 31

Economic integration

Answer 31

Described a process by which countries coordinate and link their economies

Question 32

Trading blocks

Answer 32

A group of countries that join together in order to increase trade between themselves and/or to gain economic benefits from cooperation on some level

Question 33

Preferential trading areas

Answer 33

They decrease protectionism, has a connection with the history between countries

Question 34

Free trade agreement

Answer 34

These tend to be generated be business interest, doesn’t necessarily create free movement of capital (NAFTA)

Question 35

Customs union

Answer 35

No protectionism and they adopt the same outward trade policy

Question 36

Economic and monetary union

Answer 36

They adopt the same Monterey policy because they are using the same currency

Question 37

Market failure

Answer 37

Trying to find the degree to which spiral cost and social benefit match up

Question 38

Externality

Answer 38

When the consumption or production a good or service negatively or positively affects a 3rd party

Question 39

Negative externality of production

Answer 39

When the production of a goo or service has a negative affect on a 3rd party (ex pollution)

Question 40

Positive externality of production

Answer 40

When the production of a good or service positively affects a 3rd party )MSC exceeds MPC

Question 41

Protectionism

Answer 41

The economic policy of restraining trade through tariffs, quotas or other regulations that burden foreign producers but not domestic producers