Free market economists, who believe that the LRAS curve is perfectly inelastic at the full employment level of output.
Neo-classical economists
100
The total value of all economic activity in a country, regardless of who owns the productive assets
is GDP
100
Those who claim they are actively seeking work but have no intention of finding employment
Phantom Unemployed
100
Occurs as a result of an increase in the costs of production
Cost-push inflation
100
The set of a government’s policies relating to its spending and taxation rate
Fiscal policy
200
Identify two mistakes in this diagram, considering that the diagram is describing Aggregate supply
(Use microeconomic graph)
Quantity→ Real output, national income
Price → Average price level
200
What is the formula for expenditure method?
C+I+G+(X-M) or
= Consumption+ Investment+ Government+Net export
200
What kind of unemployment shows this diagram?
Natural (Equilibrium) unemployment
200
What type of inflation is this diagram representing?
Demand-pull
200
What is the most efficient policies when there is inflation in Keynesian perspective?
Demand --side policies
300
Name 3 factors that changes the aggregate demand
income, interest rate, wealth, expectations
technology, business confidence (any of those)
300
What is the definition for GNP?
The total income that is earned by a country’s factors of production regardless of where the assets are located
300
What are the three barriers for structural unemployment?
Regional, Sectoral, Technological
300
What is the definition of inflation?
A persistent increase in the average price level in the economy
300
What are the Three ways for market-oriented supply-side policies.
Reduction in income taxes, corporations taxes, trade union power, minimum wages, unemployment benefits; Deregulation, privatization
400
Analysis status in three stages of Keynesian LRAS graph
(1) “existence of “spare capacity”, high level of unused factors
(2) spare capacity is “used up”, available factors of production become increasingly scarce
(3) Economy reaches its full capacity, all factors of production is fully employed
400
Why is using NNP more useful than GNP in terms of comparing real economic activity of a country in different time period?
NNP calculates the depreciation which gives more accurate figures in terms of not counting replacement investment
400
Suggest a way to solve the demand deficient unemployment.
The government can intervene to bring about an increase in aggregate demand through the use of fiscal or monetary policies
400
Analysis the 3 costs of economic being deflation
Unemployment,Reduce in investment from business due to lose of confidence,
Costs to debtors (anyone who has taken a loan suffers as the value of their debt rises)
400
(Using neo-classical)
Analysis what will happen to SRAS slope in order to expend?
SRAS will shift to the right in by paying extra wages for overtime. However, those solution cannot stay long thus the SRAS will shift back to where it started.
500
Evaluate one reason why using HDI is more effective way to measure economic development than using GDP
Development: a long and healthy life, improved education, and decent standard of living
Thus HDI indicates above stated better than just financial figure of GDP.
500
Evaluate three arguments about the limitation of measuring counting income.
Inaccuracies, Unrecorded economic activities, External costs, other quality of life concerns, composition of output
500
Evaluate two groups who have burden of free market policies
People who lose their unemployment: due to increase in inequity in an economy.
Worst working condition for labor: high cost for the workers themselves even with the low unemployment rate and higher economy’s output
500
What are the two problems involved in the measurement of inflation?
Arrival and Disappearance of goods
Quality of Goods
Choice of weight
500
Evaluate a point that Neo-classical economist argue against the demand side polices
In neo-classical perspective, the demand side polices only causes the inflation.