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Macro Economics > Test 2 Flash Cards > Flashcards

Test 2 Flash Cards

(70 cards)

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0
Q

What are the three general kinds of taxes

A

Personal
Corporate
Retirement

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1
Q

What are the three kinds of business

A

Sole proprietorship
Partnership
Corporation

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2
Q

Describe the progressive tax system

A

As income increases the tax rate percentage paid increases

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3
Q

Describe the regressive tax system

A

As income increases the tax rate percentage paid decreases

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4
Q

Proportional tax system?

A

As income decreases/increases the tax rate percentage paid doesn’t Change known as a flat tax

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5
Q

What is the business cycle

A

The ups and downs of business activities or the fluctuations in business activities

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6
Q

What is GDP

A

The total dollar value of all final goods and services that are produced within the border of the country by businesses and residents of the country in a given economic year

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7
Q

What is GNP

A

The total dollar value of all final goods and services that are produced within and outside the border of the country by businesses and citizens of the country in a given economic year

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8
Q

What is the classical view

A
  • no govt
  • voluntary unemployment
  • long run equilibrium
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9
Q

Keynesian view

A
  • limited govt intervention in the economy
  • voluntary and non voluntary unemployment
  • short and long run equilibrium
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10
Q

Define civilian labor force

A

Individuals that are legally capable and willing to do civilian jobs

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11
Q

Unemployment

A

Part of the civilian labor force (that are capable and willing to do civilian jobs) that didn’t find jobs

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12
Q

What are the two ways of unemployment

A

Voluntary-quit

Non voluntary-fired

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13
Q

Define structural unemployment

A

Out of job due to lack of skill

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14
Q

Define fictional unemployment

A

Changing careers

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15
Q

Cyclical unemployment

A

Out of job due to low demand for the skills

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16
Q

Define target natural rate of unemployment

A

The rate of unemployment that may occur if the economy is performing at its potential equilibrium level of output

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17
Q

Define full employment

A

When the unemployment rate is equal two at most the natural rate of unemployment

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18
Q

Define underemployment

A

Available for full-time but working part-time hours

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19
Q

What is over employment

A

Working more than the full time requirements

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20
Q

What is inflation

A

When prices increase is up to 100% or purchasing power of money decreases

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21
Q

What is deflation

A

When prices go down or purchasing power of money is higher

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22
Q

What is hyper inflation

A

Inflation rate more than 100%

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23
Q

What is stagflation

A

Simultaneous increase in both the inflation rate and unemployment rate

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24
Define price index
A measure of the price level
25
What is the consumer price index CPI
A weighted average price of a set or bundle of goods and services that are used daily by most consumers
26
What is the producer price index PPI
A weighted average price of a set or bundle of goods and services that are used daily by most producers
27
Define real income
Income adjusted for inflation based on the purchasing power
28
Define nominal income
Income not adjusted for inflation or income based on the current price level
29
What is the GDP deflator
The weighted average price of all goods and services produced in an economy for a given economic this fiscal year
30
What is the barter system
The coincidental medium of exchange of goods and services
31
Define total demand deposit TD
Money taken to the bank for safekeeping
32
Define required reserve ratio of
The percentage of the total deposit that must be kept at the bank
33
Define required reserve
The dollar amount of the total deposit that must be kept in the vault of the bank
34
Define excess reserves
The loanable funds for the dollar that is left to be loaned out after the required reserve has been taken from the total deposit
35
Define simple money multiplier deposit or
The reciprocal of the required reserve ratio
36
When changing the required reserve ratio of what happens in inflation
The required reserve ratio is increased
37
When changing the required reserve ratio of what happened in recession
The required reserve ratio is decreased
38
When changing the discount rate what occurs in inflation
The discount rate is increased
39
When changing the discount rate what happens in recession
The discount rate is decreased
40
In an open market operations what occurs in inflation
Federal Reserve sell bonds
41
In an open market operations what occurs in recession
Federal Reserve buys bonds
42
What is a bond
A instrument that becomes cash on and or after certain maturity right
43
Define interest rate
Price of money charged or premium paid by regular banks to their customers
44
Defined real interest rate
Rate adjusted for inflation rate based on purchasing hours
45
Define nominal interest
Rate not adjusted for inflation or rate based on the current price level
46
What is prime interest rate
The interest rate the banks charge to their trustworthy customers
47
What is the discount rate
The rate the national Federal Reserve Banks charge members little banks when member banks borrow money from the national Bank
48
What is the federal funds rate
The rate members little banks charge to each other when memory banks borrow money from each other
49
What is the federal funds markets
The markets where the members banks borrow money from each other
50
What causes cost push inflation
Increase in the cost of production
51
What causes demand pull inflation
Increase in the demand for goods and services
52
Define Dutch disease
Employee refusal to work due to higher marginal tax rates
53
What is the Laffer curve
Graphical representation of the relationship between the percentage tax rate and each revenue generated at each tax rate
54
What is structural budget deficit caused by
Poor management or the deficit that made her even if economy is producing at its potential equilibrium level of output
55
What is the passive budget deficit
Deficit that may occur due to bad economic times or poor economic fluctuations
56
Define nominal budget deficit
Deficit not adjusted for inflation or deficit based on the current level price
57
Define real budget deficit
Deficit adjusted for inflation or Dubson based on the purchasing power of the money
58
Define average propensity of savings
On average the percentage of each dollar earned that is saved
59
Define average propensity of consumption
On average the percentage of each dollar earned that is consumed
60
What is the first page of the aggregate supply curve
The Kinsey and stage price level doesn't change in output level change
61
What is the second stage of the aggregate supply curve
The classical stage price level change output level does not change
62
What is the third stage of the aggregate supply curve
The intermediate stage price level change Output level change
63
Define monetary policy
The means by which government manipulate the interest rates and money supply to achieve desirable results equilibrium
64
Explain expansionary monetary policy
Use the one we are in recession increase money supply and decreased interest rates
65
Explain contractionary monetary policy
Used when we are in in inflation decreased money supply and increased interest rates
66
Define fiscal policy
The means by which the government manipulate the spending and interest rates to achieve desirable equilibrium result
67
Describe expansionary fiscal policy
Is used mostly when we are in recession increase spending decrease taxes
68
Describe contractionary fiscal policy
Use mostly when we are in inflation decrease spending increased taxes
69
What does the Phillips curve do
Shows the graphical inverse relationship of the unemployment and inflation rates

Macro Economics (2 decks)

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