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Macro > Macro test 2 > Flashcards

Macro test 2 Flashcards

1
Q

Resource markets

A

Place where resources are sold to businesses.

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2
Q

Product markets

A

Place where goods and services produced by businesses are sold to households.

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3
Q

Expansion

A

A speedup in the pace of economic activity defined by high growth, low employment, increasing prices.

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4
Q

Peak

A

Upper turning point where expansion turns into contraction.

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5
Q

Contraction

A

A slowdown in the pace of economic activity defined by low or stagnant growth, high unemployment, and declining prices.

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6
Q

Trough

A

The lowest turning point of a business cycle in which a contraction turns into expansion.

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7
Q

Recession

A

If a contraction is severe enough and is visible in real GDP, real income, employment,

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8
Q

Three economic goals of every country

A
  1. Promote economic growth
  2. Limit Unemployment
  3. Keep Prices Stable ( Limit Inflation )
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9
Q

Unemployment

A

Workers that are actively looking for a job but aren’t wokring

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10
Q

Three types of unemployment

A
  1. Frictional - Temporary unemployment on being between jobs.
  2. Structural - Changes where skills are obsolete.
  3. Cyclical - Unemployment caused by a recession.
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11
Q

Unemployment rate

A

Number of unempolyed/ Number in labor force x 100

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12
Q

Who is in the labor force

A

People who are above 16 years old, able and willing to work, and are not institutionalized, in the military, in school, or retired

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13
Q

Natural rate of unemployment

A

Frictional and strutural unemployment

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14
Q

Labor force participation rate

A

Number of people avaliable for work as a percentage of the total population

labor force/People of working age x 100

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15
Q

Three problems with the unemployment rate

A
  1. Discouraged workers
  2. Unemployed Workers
  3. Rage/Age Inequalities
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16
Q

What does GDP mean

A

GDP is the dollar value of all final goods and services produced within a country’s border in one year.

17
Q

Percent change in GDP

A

Year 2 - Year 1/Year 1 x 100

18
Q

Four Parts of GDP

A

CI (70%) + I (15%) + G (20%) + Xn (Exports-Imports)
Consumer spending + Investment + Government Spending + Net Exports

19
Q

Consumer spending, Investment

A

Consumer spending - Purchases of final goods made by private individuals
Investment - Businesses spending tool and equipment

20
Q

What is GDP per capita

A

Best measure of a nation’s standard of living.

21
Q

What is not included in GDP

A
  1. Intermediate goods ( Goods inside final goods don’t count )
  2. Non Production transactions ( FInancial transactions, used goods )
  3. Non-market and Illegal Activities ( Things made at home/household production )
22
Q

Nominal and Real GDP

A

Nominal - Measured in current prices ( Don’t account for inflation )
Real - GDP is expressed in current unchanging dollars and adjusts for inflation.

23
Q

Who is hurt by inflation

A

Lenders
Savers
People with fixed incomes

24
Q

Who is helped by Inflation

A

Borrowers
A business where the price of the product increases faster than the price of the resources

25
Q

What is CPI and how do we measure it

A

CPI - Measure of inflation for consumers
Price of market basket/price of market basket in base year x 100

26
Q

What is Market Basket

A

Market Basket is collection of similar products and services

27
Q

GPD Deflator and how is it different from CPI

A

Measures the price of all goods provided, while CPI is only used for goods and services bought by consumers

28
Q

How do we find GDP Deflator

A

Normal/Real x 100

29
Q

Three Causes of Inflation

A
  1. Government prints too much money ( Banks refuse to lend so investment fails )
  2. Demand ( An overheated economy with excessive spending but the same amount of goods )
  3. Cost ( Higher production costs increases prices )( Negative supply shock increases the costs of production and forces producers to increase prices )
30
Q

What is hyperinflation and what causes it

A

Out of control increase in prices caused by significant rise in money printed and not in economic growth

31
Q

Nominal and Real

A

Nominal=Real + Expected Inflation
Real= Nominal - Expected Inflation

Macro (5 decks)

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