Macroeconomic Aggregates
These are two measures of inflation in the U.S.
What are the GDP Deflator and Consumer Price Index
The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
What is the catch-up effect?
What are two problems with insurance?
Adverse Selection and Moral Hazard
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.
What is frictional unemployment?
In addition to store of value and unit of account, this is a function of money.
What is a medium of exchange?
Fill in the blank - Increases in the prices of goods not typically purchased by U.S. consumers like aircraft will show up in the _________ but not the ___.
What are the GDP Deflator and CPI?
This is the most important factor in the production function that "scales" a society's ability to produce.
What is A - Technological Knowledge?
These are the two examples of financial markets that raise capital for firms and governments.
What are the bond and stock markets?
The recent big tech layoffs are an example of this type of unemployment.
Structural unemployment
The formula for the money multiplier.
1/reserve ratio
This increases when NVIDA builds a new semiconductor factory this year.
What are GDP and I?
This variable is responsible for the most significant explanation of variations in living standards around the world.
What is productivity?
Suppose you deposit $100 into a bank savings account that accrues 5% interest annually. Use the Future Value formula to determine this investmentโs value after 3 years.
FV = PV (1+r)^n
115.76
True / False: The unemployment rate is the percentage of the total population that is unemployed.
False- only the percentage of the total labor force.
The reserve ratio is 5%. $500 of additional reserves would generate ______.
$10,000 of money.
If the price level increased from 130 to 150, then what was the inflation rate?
15.4 percent
If you double your capital, your output doubles.
What are constant returns to scale?
A commercial landscaping company has an investment project that would cost $17 million today and yield a payoff of $25 million in four years. Should the firm accept the project if the interest rate is 11%?
$25m / 1.114 = 16.47m. Do not accept.
True / False: A service member who retired out of Active Duty earns income from his/her rental property and signed up on TaskRabbit to take on minor construction jobs in the community. He/she is a member of the labor force.
True
Cash kept in your pocket, money stored in one's checking accounts and traveler's checks are considered to be this money system.
Susan puts money into an account. One year later she sees that she has 6 percent more dollars but can only buy 4 percent more goods. Her account's nominal interest rate was:
6 percent and the inflation rate was 2 percent.
If workers already have a lot of K,
giving them more increases productivity
fairly little.
What are diminishing returns to capital?
Assume a closed economy whose market for loanable funds is in equilibrium.
GDP $7.3 trillion
Consumer Spending $5.2 trillion
Taxes Minus Transfers $1.1 trillion
Government Purchases $0.7 trillion
The quantity of loanable funds supplied is: (Use the formula for National Savings)
What is 1.4 trillion?
= (๐ โ๐ถ โ๐) + (๐โ๐บ)
or private + public savings
True / False: Discouraged workers are considered unemployed.
False- not counted in the LF.
If the money multiplier is 2 and the Fed wants to increase the money supply by $500,000, then it would buy this amount of bonds.