What are the four assumptions when using PPF curves?
Always operate at full employment, always only comparing two products, fixed resources,
technology is fixed
100
What does it mean when a product is at equilibrium?
It is when buyers and suppliers agree on a price and supply that works for both.
100
What is GDP?
An estimated value of the total worth of a country’s production and services within its boundary over the course of one year.
100
What are the two things involved in fiscal policy?
Tax and government spending.
100
If a nation’s currency appreciates, what happens to their exports?
The exports decrease.
200
What is the invisible hand?
When people try to maximize their own wealth, it benefits the economy as a whole.
200
What is the law of supply?
The quantity of a good supplied rises as the market price rises, and falls as the price falls.
200
What is GNP?
An estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign land, calculated over the course of one year.
200
What is aggregate demand?
The demand for everything added all together.
200
What is foreign exchange?
Foreign currencies used by countries to conduct international trade.
300
What is the difference between absolute and comparative advantage?
Absolute advantage is the amount of products made in a limited amount of time. Comparative advantage is the efficiency of making products.
300
What are the supply shifters?
1. cost of inputs
2. available technology
3. profitability of other goods
4. number of sellers in the market
5. producer expectations
300
What is the equation for GNP?
GDP+Nr(net income receipts)= GDP
300
Who conducts monetary policy? Fiscal policy?
The Federal Reserve conducts monetary policy and Congress conducts fiscal policy
300
What does it mean when a currency appreciates?
The value of the currency increases.
400
Resources are constant and the product varies in what kind of problem?
An output problem.
400
What’s the difference between demand elasticity and demand inelasticity?
Demand elasticity is a good or service that decreases when the price of the good or service increases, and increases when the price decreases. Demand inelasticity is a good or service that does not increase or decrease in response to changes in price.
400
What is the equation for nominal GDP?
Nominal GDP = sum of quantity x price for one particular year
400
What is the difference between classical and keynesian economics?
Classical is the belief that the economy will fix itself in the long run with no government intervention. Keynesian is the belief that the government should be involved to help fix the economy.
400
What does it mean when a currency depreciates?
The value of the currency decreases.
500
What are the four factors of production?
Land, Labor, Capital and Entrepreneurship.
500
What are the demand shifters?
1. an increase in perceived value of the good
2. an increase in consumer income
3. an increase in the price of a substitute good
4. a decrease in the price of a complementary good
5. an increase in the number of potential consumers in the market
500
What is the equation for GDP?
C+Ig+G+Xn= GDP
C = consumption
Ig = gross investment
G = government spending
Xn = net exports (exports-imports)
500
What are the three shifters for an aggregate supply curve?
Price of resources, productivity (workers better trained, new technology, new production techniques) and government actions (taxes and subsidies).