Basic Econ
What are the four factors of production?
Land labor capital and entrepreneurship
What law states that as price increases, quantity demanded decreases?
law of demand
What are the components of the GDP formula?
Consumption, Investment, Government spending, net exports
In the AD/AS Model, what happens to output and price level when AD increases?
Output and price level increase
What is fiscal policy?
Government changes in spending or taxes to influence the economy
If an economy is producing inside the PPC what does that mean?
Inefficiency or underutilizing resources
What is marginal cost?
The additional cost of producing one more unit of a good
What is the difference between nominal and real GDP?
Real gdp adjusts for inflation
Which graph shows An inverse relationship between inflation and unemployment?
short run phillips curve
What can the Federal Reserve do to help aid during a recession?
Lowers interest rates or buy bonds
What is the difference between a positive and normative statement?
Positive is fact based
Normative is opinion based
Define perfectly inelastic demand
quantity demanded does not react to price changes
What is structural unemployment?
Unemployment from a worker not having the skills for the job requirements
What shifts the SRAS curve?
Changes in input prices, productivity, or supply shocks
Which institution controls monetary and fiscal policy in the United States?
Monetary: Federal reserve | Fiscal: Congress and the President
Give an example of a good that is non excludable and non rivalrous?
National Defense
Lighthouse
etc
What is the difference between economic and accounting profit?
Economic subtracts explicit and implicit costs
accounting only subtracts explicit costs
What is the natural rate of unemployment?
The sum of frictional and structural unemployment
What can cause a shift outward of the PPC?
More resources or better technologies
What is it called when the Government borrowing increases interest rates, reducing private investment?
Crowding out
If Country A can produce 10 cars or 5 planes, and Country B can produce 6 cars or 3 planes, which country has the comparative advantage in cars?
Neither has a comparative advantage
At what point is the socially optimal level of output in a market with a negative externality?
where MSC=MSB
What are the long run effects of an expansionary monetary policy on output, employment and price level?
Increases money supply, increase output, lower unemployment, price level remains higher
What effect is there in the money supply when the Fed buys bonds?
Money supply increases
Give two examples of automatic stabilizers.
Progressive taxes and unemployment benefits