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Basic Concepts
Unemployment
Money
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100
What is the basic problem that economics addresses
Society’s material wants, that is, the material wants of its citizens and institutions, are virtually unlimited and insatiable
100
What are the 4 types?
Structural, Seasonal, Frictional, Cyclical
100
What is the equation for the Multiplier Effect?
1/1-MPC, or 1/MPS
100
Purchases of machinery, equipment, and tools by businesses, along with construction and changes in inventory are all considered what?
Investment
100
When it’s cheaper for one nation to produce something than another
Comparative Advantage
200
What are the factors of production?
Land, Labor, Capital, Entrepreneurship
200
What is considered full employment?
Full employment means no cyclical unemployment
200
What is the equation for the Money Multiplier
1/RR
200
When total spending exceeds the economy's ability to produce output at the current level
Demand Pull Inflation
200
What is the difference between a trade deficit and a trade surplus?
Trade Deficit: Imports> Exports Trade Surplus: Exports> Imports
300
This curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.).
What is the Production Possibilities Curve
300
How do you calculate the unemployment rate?
unemployed people in the labor force/total labor force X100
300
What the tools of Fiscal Policy? What are the tools of Monetary Policy?
Fiscal: Increase/Decrease Government spending and/or taxes Monetary: Reserve Requirement, Discount Rate, Open Market Operations
300
What is money?
A store of value, a unit of account, a medium of exchange
300
Who is hurt by inflation?
Fixed Income Groups and Savers
400
What is the Expenditures Approach for measuring GDP?
C+I+G+Xn=GDP
400
What are the two criticisms of the unemployment rate?
First of all, part-time workers are counted as fully employed; however, some part-time workers are people who can’t get a full-time job because of recession. This tends to understate the unemployment rate. Also, discouraged workers who are not actively searching for jobs anymore are not counted in the labor force. This understates the unemployment rate, especially in recession.
400
What is it called when prices and unemployment are both rising?
Stagflation
400
Who is the founder of Classical Economics? Who is the founder of Keynesian Economics?
Classic- Adam Smith Keynesian- John Maynard Keynes
400
What does the Phillips Curve illustrate?
The relationship between unemployment and inflation
500
What's the difference between nominal and real GDP
Nominal doesn't account for inflation whereas real does
500
What is the term to describe the following idea: For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a GDP gap of about 2% occurs.
What is Okun's Law
500
is the narrowest definition of money supply.
M1
500
What is the difference between debt and deficit?
Debt is the total accumulation of all past deficits and surpluses.
500
What is the discount rate?
The interest rate the Central Bank charges other banks for loans.