Economic Systems
This type of economic system does things the way they've always been done
Traditional
Which direction does the DEMAND curve slope
DOWN
What do you call a prolonged rise in the general price levels
Inflation
This is the interest rate a bank charges it's best customers
prime rate
Is the FED responsible for monetary policy or fiscal policy?
monetary policy
This type of economic system is controlled by the government
Command
Which direction does the SUPPLY curve slope
UP
What is the difference between Personal Income and Disposable Personal Income
Personal Income is before taxes, Disposable Personal Income is after taxes
This is the interest rate the banks charge each other on short term loans
Federal Funds Rate
Name the two theories used to explain why inflation occurs
Demand-Pull and Cost-Push
This type of economic system allows individuals to make their own decisions and own/control the factors of production
Market
This is a situation where the quantity DEMANDED is greater than the quantity SUPPLIED
Shortage
The dollar value of all final goods and services produced by a nation during the year
Gross Domestic Product or GDP
How long does it take before the effects of monetary policy can be felt?
12 months
Which economist believed that when the economy was slow, the government should step in to stimulate demand
John Maynard Keynes (must at least know the last name)
This type of economic system combines characteristics of all the other systems
Mixed
This is a situation where the quantity SUPPLIED is greater than the quantity DEMANDED
Surplus
What do you get if you take the GDP and subtract the total loss in value caused by depreciation
Net Domestic Product or NDP
What is the main purpose of a LOOSE money policy
to encourage growth
What is the classic economic example of trade-offs that uses military defense costs vs. the cost of civilian goods
guns vs. butter
What are the four factors of production
land, labor, capital and entrepreneurship
What do you call the price where the quantity demanded by consumers is equal to the amount producers are willing to supply
Equilibrium price
Name one of the three ways the government measures inflation
Consumer Price Index, Producer Price Index, or implicit GDP deflator
What is the main purpose of a TIGHT monetary policy
to control inflation
What are the four ways that unemployment is classified
cyclical, structural, seasonal, and frictional