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Macroeconomics > macroeconomics midterm 1 > Flashcards

macroeconomics midterm 1 Flashcards

1
Q

what is the equation for the GDP deflator?

A

(nominal GDP/the real GDP)*100

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2
Q

what is the GDP expenditure approach?

A

consumption + inverstments + public expenditure + net exports

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3
Q

an increase in discouraged workers cause the labor force to what?

A

decreaase

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4
Q

what is the law of diminishing returns?

A

higher saving rate allows more capital to be accumulated but the benefits become smaller over time, growth slows down.

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5
Q

what is the catch-up effect?

A

it is easier for a country to grow fast if it starts out relatively poor

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6
Q

what is the law of demand?

A

when the price of a good rises, the quantity demanded of that good falls.

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7
Q

the demand curve has what kind of slope?

A

downward slope

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8
Q

what is the market demand?

A

the sum of all individual demands for a good or service

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9
Q

with an increase in demand, the demand curve shifts to what direction?

A

to the right

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10
Q

a decrease in demand causes the demand curve to shift to what direction?

A

to the left

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11
Q

four reasons the demand curve shifts other than a price change?

A

income changes

expectations

tastes

prices of related goods

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12
Q

what is the relationship between two goods that are COMPLIMENTS?

A

an increase in the price of one good leads to a decrease in the demand for the other. (gas and cars)

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13
Q

what is the relationship between two goods that are SUBSTITUTES?

A

the increase in the price of one good leads t an increase in demand for the other good. (frozen yogurt & ice cream)

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14
Q

what is the law of supply?

A

when the price of a good rises, the quantity supplied also rises

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15
Q

the supply curve slopes in what direction?

A

upward

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16
Q

what is the market supply?

A

sum of the supplies of all sellers for a good or service

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17
Q

with a decrease in supply the curve shifts to which direction?

A

to the left

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18
Q

with an increase in supply the curve shifts to which direction?

A

to the right

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19
Q

what four factors can cause the supply curve to shift?

A

input prices technology expectations about the future # of sellers

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20
Q

what is the point called where supple and demand meet?

A

equilibrium point

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21
Q

everything above the equilibrium point is considered to be a what?

A

a surplus

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22
Q

everything below the equilibrium point is considered to be a what?

A

a shortage

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23
Q

what does the GDP measure?

A

total income and expenditure the production of a country

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24
Q

what is the GDP equation?

A

consumption + investments + gov purchases + net exports

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25
Q

what is considered consumption in the GDP?

A

spending by households on goods & services with the exception of purchases of new housing

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26
Q

what is considered an investment in the GDP?

A

the purchase of goods that will be used in the future to produce more goods and services

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27
Q

what is considered government purchases in the GDP?

A

spending on goods and services by local, state & fed governments

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28
Q

what is the GDP income approach?

A

sum profits + sum wages + sum taxes

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29
Q

What is the consumer price index (CPI)?

A

measure of the overall cost of the goods and services bought by a typical consumer, indication for the cost of living.

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30
Q

what is the equation to calculate the CPI (consumer price index)?

A

(# of basket goods/ total price for basket)*100

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31
Q

The CPI (consumer price index) is used to calculate what?

A

the inflation rate

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32
Q

the lower the inflation rate, the ________ off you are?

A

better

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33
Q

what is substitution bias?

A

prices do not change proportionately. the consumer substitutes towards goods that have become relatively less expensive. this causes the CPI to overstate the inflation rate and the increase in cost of living.

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34
Q

what is the introduction of new goods?

A

new goods that were not available in the past that affect the CPI

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35
Q

what is unmeasured quality change?

A

the quality of a good deteriates from one year to the next

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36
Q

what is the equation for productivity?

A

GDP per capita= real GDP/Total population

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37
Q

what are four determinants of productivity?

A

natural resources human capital physical capital technological knowledge

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38
Q

to grow more a country has to consume _____?

A

less

39
Q

more savings equals more investments which equals what?

A

more productivity

40
Q

human capital and physical capital are considered to be what?

A

COMPLIMENTS: the increase of one causes the decrease in demand for the other

41
Q

______ capital is an important determinant of growth?

A

human capital (education)

42
Q

in the market of loanable funds the supply curve represents what?

A

the savers

43
Q

in the market of loanable funds the demand curve represents what?

A

the investors

44
Q

what is the y axis of the loanable funds graph?

A

the real interest rate

45
Q

national savings equals what?

A

investments

46
Q

as the interest rate rises the quantity demanded ______ & the quantity supplied _____?

A

decreases & increases

47
Q

as the savings go up the equilibrium point goes where?

A

down

48
Q

the surplus of savings would shift the supply curve to the _______?

A

right

49
Q

an increase in life expectancy would _____ national savings?

A

increase

50
Q

what is the accumulation of inventories?

A

the production of final goods that was not sold during the year of production ex: firm produces 100 shirts but sells only 90, the extra 10 is considered accumulated inventories and investments

51
Q

in unemployment, the supply curve represents what?

A

the workers

52
Q

in unemployment the demand curve represents what?

A

the firms (demanding workers)

53
Q

increasing the labor force ____ the unemployment?

A

increases

54
Q

what is the labor force?

A

those who are willing to work unemployed + employed

55
Q

what is the participation rate?

A

labor force/ adult population

56
Q

what is the unemployment rate?

A

of unemployed/ labor force

57
Q

what is the net exports in the GDP?

A

exports - imports

58
Q

what is the GDP expenditure approach equation?

A

consumption + investment + public expenditure + exports - imports

59
Q

what is the GDP income approach equation?

A

sum profits + sum wages + sum of taxes

60
Q

what is the GDP?

A

production of final goods and services during a given year within a country at market values.

61
Q

what are homogeneous goods?

A

two or more goods that are basically the same

62
Q

what are atomistic agents?

A

many buyers, many sellers

63
Q

who determines demand?

A

the buyers

64
Q

who determines supply?

A

the seller

65
Q

in the demand curve, when the prices are lower the quantity demanded is what?

A

higher

66
Q

in the supply curve, when the prices go up the quantity supplied does what?

A

increases

67
Q

if input prices go up then the producer will need a ______ price in order to sell the same amount as before?

A

higher

68
Q

the GDP measures the ______ of a country?

A

production

69
Q

for any economy as a whole; income must equal what?

A

expenditures

70
Q

what is the equation for investments?

A

capital formation + variation of stocks

71
Q

goods and services made in this year but not sold in this year are considered what?

A

investments

72
Q

what is the nominal GDP?

A

the production of goods and services valued at current prices

73
Q

what is the equation for the real GDP?

A

nominal GDP/ GDP deflator

74
Q

the CPI represents the cost of living for what?

A

one year

75
Q

What are problems with measuring the cost of living?

A

substitution bias introduction of new goods unmeasured quality change

76
Q

what kind of capital can help a poor country catch up to a rich country?

A

physical capital (stock equipment)

77
Q

how can countries raise future productivity?

A

invest more current resources in the production of capital more saving equals more investments which equals more productivity

78
Q

poor economies need to save _____ and consume _____ to grow?

A

more less

79
Q

what is a foreign direct investment?

A

a capital investment that is owned and operated by a foreign entity

80
Q

an example of human capital is what?

A

education

81
Q

the problem for poor countries is that there is what?

A

brain drain

82
Q

what is the vicious circle in poor countries?

A

poor –> bad nutrition –> less productive –> lower wages –> poor

83
Q

what is the financial system?

A

a group of institutions in the economy . moves the economies scarce resources to safety

84
Q

in the market of loanable funds the supply curve represents what?

A

the savers

85
Q

in the market of loanable funds the demand curve represents what?

A

the investors

86
Q

in the market of loanable funds a surplus of savings would shift the supply curve in hat direction?

A

to the right

87
Q

in the market of loanable funds, as savings go up the equilibrium goes where?

A

down

88
Q

in the mark of loanable funds, as interest rates rise the quantity demanded ______ and the quantity supplied ______?

A

decreases increases

89
Q

national savings equal what?

A

investments

90
Q

in the labor market the supply curve represents what?

A

the workers

91
Q

in the labor market the demand curve represents what?

A

the firms (demanding workers)

92
Q

a surplus in the labor market means what?

A

unemployment

93
Q

an increase in discouraged workers causes the labor force to what?

A

decrease

Macroeconomics (2 decks)

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