UNIT 1
Unlimited wants with limited resources.
What is scarcity?
Not included in GDP.
What is transfer payments?
Every dollar spent is a dollar earned.
What is income?
AS movement with an increase in technology.
What is increase?
Unemployment that always exists.
A point inside the PPC.
What is inefficient?
GDP formula.
What is C/I + GS + NE?
Base year CPI value.
What is 100?
AS movement with an increase in government regulation.
What is decrease?
Labor force formula.
AD movement with an increase in income.
What is increase?
Today's output multiplied by the base year's prices.
What is RGDP?
Who is Adam Smith?
US= 40 shirts, 70 socks
Japan= 60 shirts, 30 socks
The ability to produce at a lower opportunity cost than others.
What is comparative advantage?
AD movement with a decrease in expectations of future prices.
What is decrease?
Known problems of CPI.
What is overstates inflation, substitutes, quality, and new goods?
Everything has a cost.
Best measure to evaluate the standard of living.
What is RGDP per capita?
Most important formula to know.
What is N-I=R?
Price above equilibrium.
What is surplus?
Basic CPI formula.
What is the cost of the basket of goods in this year divided by the cost of the basket of goods in the base year multiplied by 100?
High inflation with high unemployment.
What is stagflation?
Comparative Advantage:
US: 25 shoes, 50 hats
Japan: 40 shoes, 4 hats
What is US has the comparative advantage in shoes, while Japan has the comparative advantage in hats?
Households buy or sell in the goods and services market.
What is buy?