the condition in which virtually all who are able and willing to work are employed
100
What happens to the supply for a product when the price increases?
The supply stays the same, but the quantity supplied increases.
100
All adults that want and are willing to work--the employed and the unemployed together--are called:
the labor force
100
To calculate a person's average propensity to consume (APC), you would use the formula:
C/DI or consumption/disposable income
100
Increasing the demand for the US dollar would do what to the supply of money:
decrease supply of money
200
When we decide that the benefit is more than the cost, we call this:
thinking at the margin
200
When price rises, what happens to supply and demand?
The supply increases and the demand decreases.
200
What is it called when people are not working because firms do not need their labor due to lack of demand or downturn in the business cycle; typically this is found in a recessionary period.
cyclical unemployment
200
Increased taxation and decreased federal spending are two policies known as:
contractionary fiscal policies
200
When a country's currency is in demand, what happens to their imports and exports?
Their imports would increase and their exports would decrease.
300
The idea of preventing the government from interfering in the workings of the free market was created by and is called what?
Laissez-faire economics created by Adam Smith
300
Define the law of demand.
The law states that, all other things being equal, as the price of an object increases, its quantity demanded will decrease.
300
Define inflation and explain its impact on savings and purchasing power.
Inflation is a sustained increase in the general level of prices for goods and services. Savings: value of dollar does not stay constant.....Purchasing Power: declines
300
List the four components of aggregate demand.
1. consumer spending
2. investment spending
3. government spending
4. net exports
300
What are foreign exchange futures?
currencies on the future's market to protect against changing exchange rates
400
Define comparative advantage.
when one has the lowest opportunity cost, meaning that they give up the least to produce the item, even though they may not be the best at making it
400
List 4 demand shifters.
1. tastes and preferences
2. number of consumers
3. price of related goods
4. income
5. expectations
400
What is real GDP compared to nominal GDP?
Real GDP has been adjusted for yearly price changes, whereas nominal GDP hasn't been adjusted for price changes.
400
What is it called when the government takes action/passes a law/changes taxes to create a change?
a discretionary stabilizer
400
An increase in the United States demand for French goods would do what to the supply and international value of the US dollar? Why?
The supply of dollars would increase due to the increased demand for French goods and currency, and the international value of the US dollar would go down.
500
Name 4 of the 7 principles of economics.
1. scarcity forces tradeoff
2. cost vs. benefit
3. thinking at the margin
4. incentives matter
5. trade makes people better off
6. markets coordinate trade
7. future consequences count
500
When a market for a product is in equilibrium what two factors equal each other?
quantity supplied equals quantity demanded
500
How do you calculate real GDP?
(nominal GDP x 100)/price index
500
The investment multiplier or government spending multiplier differs in what way from the tax multiplier?
1/(1-MPC) or 1/the marginal perpensity to save.....versus.....-MPC/(1-MPC) or -marginal propensity to consume/marginal propensity to save
500
If country X's interest rate is higher than another country Y's interest rate, which country has the higher demand for their money? Why?