VWL Flashcards
(115 cards)
1
Q
Capital
A
Things that are used in the production of goods and services (money, workforce..)
2
Q
Factors of production
A
Inputs into the process of production
3
Q
Production
A
Process of transforming resources into goods & services
4
Q
Input / Resources
A
Something provided by nature that is used to satiafy human wants
5
Q
Opportunity Cost
A
Best alternative to give up
6
Q
Output
A
Final or intermediate product
7
Q
Absolute advantage
A
If he produces the same good using less resources
8
Q
Comparative advantage
A
If he produces the good at lower opportunity cost
9
Q
Production Possibility Frontier
A
Graph that shows all goods and services that can be produced if all societys ressources are used
10
Q
Actors of a closed laissez fair economy
A
Entrepeneur (make business)
Households (consuming)
11
Q
Markets of a closed laissez faire economy
A
Product/Output Market (Exchange of products)
Input market (Ressource exchange)
12
Q
Markets
A
Labour market
capital market
land market
goods and services market
13
Q
Quantity demanded depends on:
A
Price of product Income of Household accumulated wealth of household prices of other products taste and preferences expectations about future
14
Q
Law of demand
A
Substitution effect (buying more expensive goods intstead of cheaper ones)
Income effect (Less income = less consumption)
15
Q
Demand Normal goods
A
Demand rises/falls when income inc./decr.
16
Q
Demand inferior goods
A
Demand falls when increase in income
17
Q
Giffen good
A
Price rises -> demand rises
18
Q
Substitute
A
Replacement goods when the price of another good increases
19
Q
Perfect substitute
A
Identical product
20
Q
Complementary goods
A
Goods that go together
21
Q
Quantity Supplied
A
The amount of a product that a firm would be willing and able to offer for sale at a particular price at a certain time
22
Q
Law of supply
A
Price increase -> more supply
Price increase -> less supply
23
Q
Equilibrium Supply/Demand
A
When quantity demanded = quantity supplied
Then no tendence for a price change
24
Q
Excess demand/shortage
A
Quantity demanded > Quantity supplied
25
Excess supply/surplus
Quatity supplied > Quantity demanded
26
Price rationing
Describes how quantity supplied effects the price
27
Price ceiling
Government decides a maximum limit of a product
28
Price floors
Do not get a good become to cheap -> labor
29
Consumer surplus
Difference between max value a consumer would pay for a good and its current price
30
Producer surplus
Difference of current market price and production rest of a product
31
Deadweight loss
Lost consumer and producer surplus that would occure in an efficient market
32
Elasticity
The ratio of the percentage change in one variable to the percentage change in another variable
33
Price elasticity of demand
The ratio of thr percentage of change in quantity demanded to the percentage of change in price
34
Utility
The satisfaction a product brings relatively to alternative product -> bais of choice
35
Marginal utility
Addition satisfaction by one more product unit
36
Total utility
Total satisfaction by a product
37
Law of diminishing marginal utility
The more you consume of one good the less satisfaction it will generate
38
Profit
Total revenue (Quantity * price) - Total cost
39
Short run
Period of time in which firms can neither enter or exit an industry and the firm is operatingunder a fixed scale
40
Long run
Period of time within no fixed factors of production. They can enter exit markets and increase/decrease scale of operations
41
Marginal product
Additional output by adding one more specific input unit
42
Law diminishing returns
je mehr sich marginal product erhöht, desto geringer wird steigung
43
Total cost
Fixed + variable cost
44
Average fixed cost (AFC)
Total fixed cost / quantity of output
45
Marginal cost
Increase in total variable cost by producing one more unit of a good
46
Average variable cost (AVC)
TVC / quantity output
47
Marginal revenue (MR)
Additional revenue that a firm takes by increasing output of one product
Perfect competition: MR = P
48
What does firms want
Firms want to maximize the difference between the total revenue and total cost
49
Actors in Macro
Firms, households, goverment, rest of the world
50
Aggregiate behaviour
Behaviour of all households and firms
51
Sticky prices
Prices that do not always adjust rapidly to miaintain equality between quantity supplied and demanded
52
Major concerns of macro
Inflation
Unemployment
Output growth
(2 + 3 go well together)
53
Inflation
Increase of overall price niveau
54
Hyperinflation
Very rapid increase of the overall price level
55
Deflation
Decrease of the overall price level
56
Disinflation
Decrease of inflation rate
57
Aggregate output
Total quantity produced during one period in one country
58
Reccession
Decline of output -> 2 consecutive quarters
59
Policies that the government uses to influence the macroeconomy
Fiscal policy (taxes, expenditures)
Monetary policy (Central bank tools to control quantity of money)
Growth or suppky (side policies)
60
Transfer payment
```
Cash payment from government to people.
Welfare payments (Hartz 4 etc.)
```
61
3 Market arenas
Goods and service market (firms supply, firms/gov(hh demand)
Labor markt (hh supply, firms/gov demand)
Money market (hh demand + supply, firms/gov(restWorld also borrow and lend)
62
Treasury bonds
Staatsanleihen
63
Corporate bonds
Unternehmensanleihen
64
Business Cycle
```
Through
Expansion
Peak
Recession
Through
```
65
GDP (Gross domestic product)
Total market value of all final goods/services in one period + one economy
66
GNP (Gross national product)
Total market value off all final goods/services produced by a production owned by a countries citizen, regardless of where the good was produced
67
Net investments
Gross investment- depreciation
68
Government consumption/investment
Expenditures by government for final goods/services
69
Nominal GDP
With inflation
70
Real GDP
without Inflation
71
GDP deflatior
Nominal GDP / Real GDP
72
Problems of fixed weights/prices
Structural changes in economy
Substitution effect of increasing prices
Supply shifts -> decrease in price + increase in supply
73
GNI (Gross NAtional income)
GNP converted in dollar without inflation
74
Aggregate output
Quantity of goods/services produced of an economy in one period
75
Aggregate income
Total income recieved by factors of production in one period
76
Savings
Aggregate income - Consumption
77
Marginal propensity to consume (MPC)
How much would household spend of one extra dollar
78
Marginal propensity to save (MPS)
How much to save out of 1$ extra
79
MPC + MPS =???
1
80
Investments
Purchases by firms of new buildings/equipment or more inventory that increase the companys capitaö
81
Change in Inventory
Production - Sales
82
Planned aggregate expenditure
The amount of money an economy plans to spend
83
Equlibrium Planned aggregate expenditure
When there is no tendency for change, when planned expenditure is equal to output
84
Net taxes
taxes paid by firms / hh
85
Discretionary fiscal plicy
Changes in taxes or spendings influenced by the government
86
Budget deficit
G (Gov. spending) - T (taxes)
87
Equilibrium output
Output equals expenditure (leakage (Savings + taxes) equals injenctions (Investments + gov. spending)
88
Federal debt
Total amount owed by government
89
When economy is expanding
Less Transfer payments
| Inflation often rising -> usually gov spends more
90
Automatic stabilizers
Anticyclic spending of gov. related to current state of the economy
91
Fiscal drag
Negative effect of higher tax brackets for households during economy expansions
92
Full Employment budget
Federal budget at full employment level
93
Structural defiicit
Deficit that remains at full employment
94
Cyclical deficit
Deficit that occurs because of a downturn in business cycle
95
What is Money
Anything that is generally acceoted as a medium of exchange
- > Means of payment
- >medium of exchange
- >store of value
- >Unit of account
96
Commodity money
Kupermünzen -> haben reellen wert
97
Token
Scheine (kein reeller wert)
98
Legal tender
Gesetzliches Zahlungsmittel
99
Currency debasement
decrease in value of money by increasing supply
100
Transaction money
Money that can be directly used
101
Broad money
Liquid money + less liquid money
102
Networth
Assets - Liabilities (Verbindlichkeiten)
103
Reserves
Deposits that a bank has to deposit at the central bank
104
Excess reserves
Actual reserves - required reserves
105
Task of Fed
Clearing interbank payment
Providing fonds for banks when no one else does it
106
Tools of the central bank
1. changing required reserve ratio (RR hoch = less money supply und anders rum)
2. Changing discount rate
3. Engaging in open market operations
107
Discount rate
Leitzins
Interest rate for from CB to other banks
108
Open market operations
Purchase/Sale of government securities by CB to expand/contract the reserves and the money supply
109
T Bills
Staatsanleihen
110
Interest
Fee that borrowers pay to lenders
111
Transaction motive
Main motive to hold money, because of buying somthing
112
Speculation motive
Falling interest rate -> rising bond values
Rising interest rate -> falling bond values
When interest rates are high, investors would like to buy bonds to speculate that interest falls and bonds rises
113
Determinant of money demand
Interest rate
Dollar volume of transactions = output/ price level
114
CB Tight monetary policy
COntract money + restrain economy
115
CB Easy Monetary policy
Expand money + stimulate economy
