(Un)employment
is it possible to have 0 cyclical, 0 frictional, and 0 structural employment?
no
What is the spending multiplier
1/MPS or 1/1-MPC
Difference between real vs nominal GDP
Real accounts for inflation
Is taxation a form of fiscal or monetary policy
fiscal policy
Trade surplus
Joe quits his job at a candy shop to find better work but is unable to. what type of unemployment is this
frictional
What is the tax multiplier
MPC/MPS or MPC/1-MPC
If the real gdp is 150 million and the GDP deflator is 200, what is the nominal GDP?
300 million
If the FED sells bonds, does it increase or decrease the money supply?
decrease
If the domestic interest rate goes up, does the domestic currency appreciate or depreciate?
It appreciates
equation for unemployment rate
(# unemployed / labor force)*100
if required reserves is 10% and someone deposits 10,000, what is the total change in money supply?
90,000
what is the income approach of calculating GDP
wages + rent + interest + profit
Which policy is quicker to put into action, monetary or fiscal policy?
monetary
If an American citizen visits another country and buys a factory, is this considered apart of the current or financial account of America.
Financial account
What is the natural rate of unemployment?
Structural and frictional unemployment, but no cyclical
if there is a 300 million increase in consumption and MPC = 0.8. what is the total change in spending?
150 billion
if a good is unfinished in country a and finished and sold in country b, what countries GDP does it count for
When a good is unfinished in Country A and finished and sold in Country B, the GDP contributions are split between the two countries based on the stages of production and the final sale
This term describes a situation where government borrowing leads to higher interest rates, which can reduce private investment.
Crowding out
What are four shifters of supply and demand for the foreign exchange market?
Income, interest rates, preferences, pricelevel
an increase in discouraged workers does what to employment levels
decrease
assume that an economy has a negative output gap of 80million and MPS is 0.3. Identify the change in government spending that could close the gap.
the change in government spending needed to close the $80 million negative output gap is approximately $24.02 million.
Difference between GDP deflator and CPI?
CPI only measures the prices of a fixed basket of goods while the deflator measures all prices.
This fiscal measure involves reducing government spending and/or increasing taxes to slow down an overheating economy.
Contractional fiscal policy
Joe can make 20 baskets or 80 cups
Mark can make 50 baskets or 100 cups
Who has the comparative advantage in producing baskets?
Mark