Unit 1
Opportunity Cost
What is unemployment?
Someone who is not employed, and cannot find work.
What is the money market?
Consists of various financial institutions and dealers, wo seek to borrow or loan securities
What is fiscal policy and its effects?
The government's use of taxes, spending, and transfer payments to promote economic growth stability. The effects is to change aggregate demand for goods and services.
What is the balance of payment accounts?
This summaries the economic transactions of an economy with the rest o the world.
What is scarcity?
Gross domestic product, gives information about the size of the economy and how the economy is performing.
What are financial assets?
a liquid asset that gets its value from a contractual right or ownershop claim.
What is the Phillips curve?
Represents the average relationship between unemployment and inflation.
What are 3 trade barriers?
Quotas, Embargo, Subsidies
The labor is provided by _______, and the goods and services is provided by ______.
Households, firms
What is in the business cycle?
Expansion, Peak, contraction, trough
What is a money multiplier? What is the formula?
Ratio of the money supply to the monetary base. 1/reserve ratio
What is the supply-side theory? What do some economists believe?
That contends that increases in the supply of goods lead to economic growth. The government should increase production through tax cuts and reduced regulation.
Exchange rates defined?
Relative price of one currency expressed in terms of another currency.
There is no such thing as a _____ ______.
free market
Nominal vs Real GDP
Nominal GDP is the market value of the final production of goods and services within a country in a given period using that year's prices(current prices). Real GDP is an inflation-adjusted measure that reflects the value of al goods and services produced by an economy in a given year.
What are nominal vs real interest rates?
Nominal: interest rate before taking inflation into consideration
Real: the lending interest rate adjusted for inflation as measured by the GDP deflector.
What is a government deficit? What is national debt?
How does high or low inflation rates affect currency exchange rates? What is this effect on goods?
Inflation is the decrease in purchasing power of a currency. When inflation is high, the value of the country's currency weakens. This is because goods become more expensive, and less attractive for investors to do business.
Private enterprise is privately owned, what is public enterprise?
the government owns the means of production
what is a price indice?
Measure the relative price changes
What is Ample reserves?
What are some automatic stabilizers?
Taxes, unemployment insurance, government budgets
What are 3 factors that affect currency values?
Interest rates, inflation, exchange rates