chapter 9
define- crowding out
government spending a lot of money causing interest rate to go up and makes it harder for businesses to borrow money slowing down the economic growth
what does the concept of no free lunch mean
the incentive of everything is a trade off and if you're going to trade off for something go big or go home
what's the underemployment rate formula
unemployed/labor force x 100
the amount of time money moves from person to person on a finished good or service
the side of m with an arrow + v with an arrow represent what
inflation plus real growth
If there is a shortage of loanable funds, the interest rate wil
increase
how do you beat the market
have inside info and act fast
what's a discouraged worker
ppl who have given up looking for a job but want to get a job
what is a real price
a price after they correct the inflation
define menu costs
when restaurants have to keep printing new menus to keep up with the inflation
define investment and give an example
investment= the purchase of new capital goods
ex- starting a business
not the stock market
what does the market wage equal
this is where you find the equillibrium
define underemployment
when your skills don't match the job you have
what does the price index do
measure the avg prices in a given period compared to prices of a base period
define shoe leather cost
spending more money than usual in an environment of inflation
does tax credit encourage or discourage people to invest more and therefore shifts the demand curve ? and why
encourages which shifts the curve outwards , and it causes the economy to spend more
what's the risk of investing in stocks and other assets
speculative bubbles
the three types of unemployment
fictional frictional and structural
what are the two equations for quantity theory of money, what's the difference and define the variables
mv=pyr
m+v=p+yr
difference is one if for growth
m=money supply v=velocity p=price index yr=real gdp
define sticky wages and sticky prices
sticky wages-wages that aren't flexible
sticky prices -when the price isn't adjusted from inflation from the menu costs
why is the stock market not considered an investment in economic terms
because it's a transfer of ownership and it's supposed to be a new capital good
what is an active fund and a passive fund and explain
active fund- managers who pick stocks individually and charge higher fees
passive funds-when one picks a broad group of stocks to rep the stock market
LFPR=
unemployed + employed / adult population oops actually I have no clue
what does the side of p+yr mean
nominal gdp
exampled of what could shift the LRAS
war weather technology blah blah