Basic Econ
Business Cycle & Key Economic Indicators
National Income & Price Determination
Financial Sector
LR Consequences of Stabilization Policies
Open Economy - International Trade
100
Illustrates how an economy uses it's resources for the production of one good vs. another good
Production Possibilities Curve
100
Model of an economy featuring businesses and households exchanging resources and goods/services
Circular Flow Diagram
100
What causes shifts in the AD curve?
Changes in consumption, investment, government spending and net exports (exports - imports)
100
What is the relationship between the price of previously issued bonds and interest rates
They are inversely related
(ex. as interest rates go UP, the value of previously issued bonds at lower interest rates go DOWN)
100
What does the short run Phillips Curve illustrate?
The short run trade-off between inflation and unemployment
100
What is included in the current account?
Net exports, net income from abroad and net unilateral (one way) transfers
200
Determines who should produce a good or service
Comparative Advantage (i.e. who has the lowest opportunity cost)
200
Expenditure, Income and Value Added
Three ways to calculate GDP, they should all result in the same total
200
Quantifies the size of the change in AD as a result of a change in any of the components of AD
Spending multiplier
200
What is fractional reserve banking and what does it create?
Fractional reserve banking is when deposits in a bank create required reserves and excess reserves. Excess reserves are loaned out creating a chain of money creation.
200
On the Phillips Curve, where are inflationary gaps and where are recessionary gaps?
Inflationary gaps are left of the LR equilibrium
Recessionary gaps are right of the LR equilibrium
200
What is included in the Capital and Financial Account (CFA)?
Financial capital transfers/purchases and sales of assets between countries
300
An inverse relationship between price and quantity demanded
Law of Demand
300
The percentage of adult population that is in the labor force
Labor Force Participation Rate
300
The change in consumer spending divided by the change in disposable income
MPC - Marginal Propensity to Consume
300
1/RR
Money multiplier
300
How do demand shocks and supply shocks effect the Phillips Curve?
Demand shocks move along the SRPC
Supply shocks shift the SRPC
300
What drives demand for a nation's currency?
Demand for their goods, services and financial assets
400
A positive relationship between price and quantity supplied
Law of Supply
400
Types of unemployment that are unavoidable
Frictional + Structural Unemployment = the Natural Rate of Unemployment
400
Why is the SRAS curve upward sloping?
Sticky wages and prices
400
In the money market, when is equilibrium achieved?
When the nominal interest rate is such that the quantities demanded and quantities supplied of money are equal.
400
What is crowding out?
The adverse effect of increased government borrowing, which leads to decreased levels of interest sensitive private sector investment/spending in the short run
400
Appreciation of a nation's currency will effect their net exports in what way?
Appreciation > their exports seem more expensive > so exports will fall > net exports will move toward a negative
500
When quantity supplied equals quantity demanded
Market equilibrium
500
Fluctuations in aggregate output and employment because of changes in aggregate supply and/or aggregate demand
Business Cycle
500
How does the LRAS curve correspond to the PPC?
They both represent maximum sustainable capacity
500
Three tools of monetary policy in a limited reserves framework
Discount rate, open market operations and reserve requirement
500
How do we measure economic growth?
Change in real GDP per capita over time
500
Depreciation of a nation's currency will effect their net exports in what way?
Depreciation > their exports look comparatively less expensive > exports will increase > net exports move toward a positive
600
Who has the comparative advantage for bikes?
Country A
600
What is the real GDP for 2017 (with 2015 as the base year)?
$530,000
600
Three automatic stabilizers
Progressive income tax, unemployment insurance, welfare programs
600
In the loanable funds market, who supplies and who demands?
Savers supply loanable funds
Borrowers demand loanable funds
600
What are supply side fiscal policies?
Fiscal policies that affect aggregate demand, aggregate supply and potential SR and LR output by influencing incentives that affect household and business spending.
600
How do interest rates affect financial capital flows?
Financial capital will flow toward the country with the relatively higher interest rate