Microeconomics
Minimum wage is an example of a...
Price Floor
What are the 4 components of GDP?
Consumer Spending, Government Spending, Investment Spending, & Net Exports (Exports-Imports)
Jim works at a ski resort. He lost his job due to the warmer weather and closing of the resort.
Seasonal Unemployment.
An individual who is unemployed but is no longer actively seeking employment. Not included in the labor force or unemployment rate.
Who is responsible for fiscal policy?
The Legislative Branch and the President.
If the quantity supplied is greater than the quantity demanded, the market is in a...
Surplus.
A school district purchases new desks for the high school.
Government Spending
Who is included in the labor force?
Employed - Currently working for pay
Unemployed - Out of work and actively seeking employment.
What tool is used to calculate inflation?
The Consumer Price Index (CPI)
What is the Federal Funds Rate?
The interest rate charged by banks to borrow from each other.
Impacted by monetary policy.
Define "Opportunity Costs".
The cost of one item is the lost opportunity to do or consume something else.
The value of the next best alternative.
French consumers increase their spending on U.S. goods and services.
Net Exports (Exports)
Mary recently graduated from college and is currently applying for jobs.
Frictionally unemployed.
What types of money are included in the M1 money supply?
Currency in circulation, Checkable deposits, Savings deposits
If the macroeconomy was experiencing an inflationary gap, what would the fiscal and monetary policy approaches by?
Contractionary:
- Fiscal: Decrease gov't spending, increase taxes.
- Monetary: Increase interest rates, decrease money supply.
What is elasticity?
How do sales change when price is raised?
Measure the responsiveness of one variable to another.
Emily goes to the salon and gets a haircut.
Elise works as a bank teller. Due to the increased use of ATMs, Elise is let go.
Structurally unemployed.
What is the Federal Budget deficit?
How much the government has borrowed in one particular year (different between income and spending)
Which group of the Federal Reserve is responsible for monetary policy?
The Federal Open Market Committee
The difference between the price consumers are willing to pay and the price they actually pay.
Consumer Surplus.
Chris buys a desk at a yard sale.
Not included in GDP
Kevin recently lost his job due to a recession.
Cyclical unemployment.
If AS and AD intersect on the LRAS curve, what does that mean for the economy?
If the nation was in a recession, what would the fiscal and monetary policy approaches be?
Expansionary Policies
- Fiscal: Increase gov't spending, cut taxes
- Monetary: Decrease interest rates, increase money supply