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ECO Quiz 2
Quiz
43
Economics
Graduate
11/04/2010

Additional Economics Flashcards

 


 

Cards

Term
What is aggregate demand?
Definition
The amount demanded of all goods and services at different price levels, ceteris paribus.
Term
Why does AD slope downward?
Definition
Wealth or real balance effect.
Term
What are some causes of aggregate demand?
Definition

1.When more or less goods are bought at the same price level.

2.Changes in money supply.

Term
What is the Keynesian multiplier?
Definition
Ratio of the change in the equilibrium level of income to the change in government spending.
Term
What is Aggregate Supply?
Definition

The quantity supplied of all goods and services and different price levels, ceretis paribus.

 

Term
What are some reasons for AS curve shift?
Definition

1.Input Prices

2.Productivity

3. Legal or institutional environment

 

Term
How do you calculate unemployment rate?
Definition
# of Unemployed/ Labor force x 100
Term
What are 3 types of unemployment?
Definition
Frictional, Structural and Cyclical.
Term
What is Frictional Unemployment?
Definition
Unemployment due to Labor Turnover.
Term
What is Structural Unemployment?
Definition
Workers skills don't match what employers need or change in Technology.
Term
What is cyclical Unemployment?
Definition
Unemployment due to the business cycle.
Term
What is full employment?
Definition
Unemployment with only frictional and structural Unemployment (no cyclical).
Term
What are main causes of Unemployment?
Definition

1.Welfare legislation

2.Unemployment welfare

3.Minimum Wage Laws.

4.Pro-Labor Union Legislation.

Term
What is Underconsumption?
Definition
Consumption decreases and since it is the largest component of spending money, business profits decrease and business activity contracts as a result.
Term
What is the real business cycle theory?
Definition
Says that the business cycle emanates from the supply side, not demand.
Term
What is economics?
Definition
The study of the production of wealth in a division of labor society.
Term
What is a division of labor?
Definition
A system of production in which the labor required to produce is broken down into separate , distict occupations.  The produce little or none if what they consume and rely on the labor of others for all or most of what they consume.
Term
What is wealth?
Definition
Material goods made by humans.
Term
What is scarcity?
Definition
The desire for wealth and labor is greater than the supply available.
Term
What is the art of economic thinking?
Definition
Seeing the effects of an act, policy, or event not just on one group of individuals, but on all groups of individuals.  Also, long range effects.
Term
What can you gain from a division of labor?
Definition

1.Economies of learning and motion.

2.Perfect one task.

3.Multiplication of knowledge.

 

Term
What is egoism?
Definition
Being concerned with one's self and acting in a long range manner through the use of one's own mind.
Term
What is altruism?
Definition
To give up a greater value to obtain a lesser value for others.
Term
What is capitalism?
Definition

Private ownership of the means of production.

Bans the initiation of physical force.

Means economic freedom and protection of individual rights.

Implies voluntary trade.

Term
What is socialism?
Definition
Totalitarian system of government in which a single ruling party controls state-owned means of production.
Term
What is productive spending?
Definition
Spending engaged in for the purpose of making subsequent sales.
Term
What is consumptive spending?
Definition
Spending for ones self, not for the purpose of subsequent sales.
Term
What is GDP?
Definition

Total market value of all final goods and services produced within a country's borders in a given year.

(Not a measure of output, but spending).

 

Term
What are some problems with GDP?
Definition

1.Not a gross measure of spending.

2.Fails to account for a large amount of spending by business for inventory.

3.Just a measure of consumer spending.

Term
What is Gross national revenue?
Definition
Equals total productive and consumptive spending.
Term
What is inflation?
Definition
Sustained rise in the general price level.
Term
What are effects of inflation of the money supply?
Definition

A.Redistibutes wealth from lenders to borrowers.

B. Overconsumption.

C. Reversal of safety.

D.Increases uncertainty in the economy.

E. Mal-Investment.

F. Capital deculumulation.

Term
How do you calculate unemployment rate?
Definition
Number unemplyed/Labor Force x 100
Term
What is the real business cycle theory?
Definition
Says business cycle emanates from the supply side, not demand.
Term
What can't Real business cycle theory come from the supply side?
Definition

1.Prices move in the wrong direction.

2.Doesnt create changes on the side of money we see during a cycle.

3.Doesnt explain economy wide fluctuations.

Term
What is the Business or trade cycle?
Definition
Fluctuation, over time, of economic activity.
Term
What is fiscal policy?
Definition
Changes in government expenditures and/or taxes to achieve particular economic goals.
Term
Why doesn't an increase in government spending automatically increase demand in ecomony?
Definition

1. Only increases spending if government inflates the money supply.

2.If government borrows from public,public has less money to spend.

Term
What are some detrimental effects of increased government spending?
Definition

1. If it inflates, it causes all of the negative effects of inflation.

2.If it taxes and spends, it diverts funds from productive activites and discourages production.

3.If it borrows from the public to spend more, it diverts from production.

Term
What is government debt?
Definition
Debt is the accumulated amount of borrowing.
Term
What is government deficit?
Definition
Occurs when total spending exceeds tax revenues during a given period.
Term
What is the difference between Nominal vs. Real GDP?
Definition
Nominal is prices of products within the year and Real GDP also accounts for inflation.
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