Term
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Definition
| the fall in total surplus that results when a tax (or some other policy) distorts a market outcome |
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Term
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Definition
| the price prevailing in works markets |
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Term
1) when a country allows trade and becomes an exporter of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off
2) trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers |
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Definition
| Analysis of an exporting country: |
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Term
1) when a country allows trade and becomes an importer of a good, domestic consumers of the good are better off, and domestic producers of the good are worse off
2) trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers |
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Definition
| Analysis of an importing country: |
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Term
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Definition
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Term
| reduces the quantity of imports and moves the domestic market closer to its equilibrium without trade |
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Definition
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Term
1) jobs argument
2) national-security argument
3) infant-industry argument
4) unfair-competition argument
5) protection-as-a-bargaining-chip argument |
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Definition
| Arguments for restricting trade: |
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Term
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Definition
| argument that trade with other countries destroys domestic jobs |
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Term
| National-Security Argument |
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Definition
| argument that when an industry is threatened with competition from other countries, the industry is vital for national security |
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Term
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Definition
| argument from new industries to have temporary trade restrictions to help them get started then these industries will mature and be able to compete with foreign firms |
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Term
| Unfair-Competition Argument |
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Definition
| argument that free trade is desirable only if all countries play by the same rules |
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Term
| Protection-as-a-Bargaining-Chip Argument |
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Definition
| argument that trade restrictions can be useful when we bargain with our trading partners; states that the threat of a trade restriction can help remove a trade restriction already imposed by a foreign government |
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Term
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Definition
market value of all final goods and services produced w/in a country in a given period of time;
measures the total income of everyone in the economy and the total expenditure on the economy's output of goods and services |
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Term
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Definition
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Term
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Definition
| spending by households on goods and services |
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Term
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Definition
| the purchase of goods that will be used in the future to produce more goods and services |
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Term
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Definition
| include spending on goods and services by local, state, and federal governments |
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Term
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Definition
| equal the purchases of domestically produced goods by foreigners (exports) minus the domestic purchases of foreign goods (imports) |
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Term
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Definition
| the production of goods and services valued at current prices |
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Term
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Definition
| the production of goods and services valued at constant prices |
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Term
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Definition
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Term
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Definition
| a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 |
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Term
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Definition
| a measure of the overall cost of the goods and services bought by a typical consumer |
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Term
1) Fix the basket
2) Find the prices
3) Compute the basket's cost
4) Choose a base year and computer the index
5) Compute the inflation rate |
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Definition
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Term
| price of basket of goods and services / price of basket in base year x 100 |
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Definition
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Term
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Definition
| the percentage change in the price index from the preceding period |
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Term
| (CPI in yr 2 - CPI yr 1) / CPI yr 1 x 100 |
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Definition
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Term
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Definition
| a measure of the cost of the basket of goods and services bought by firms |
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Term
1) substitution bias
2) introduction of new goods
3) unmeasured quality change |
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Definition
| Problems in measuring cost of living: |
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Term
| value yr 1 / CPI year 1 = value yr 2 / CPI yr 2 |
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Definition
| formula for finding dollar figures from different times |
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Term
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Definition
| the automatic correction of a dollar amount for the effects of inflation by law of contract |
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Term
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Definition
| the interest rate as usually reported without a correction for the effects of inflation |
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Term
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Definition
| the interest rate corrected for the effects of inflation |
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Term
| R = N [nominal interest rate] - Inflation |
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Definition
| Formula for real interest rate: |
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Term
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Definition
| the group of institutions in the economy that help to match one person's saving with another person's investment |
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Term
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Definition
| financial institutions through which savers can directly provide funds to borrowers |
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Term
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Definition
| financial institutions through which savers can directly provide funds to borrowers |
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Term
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Definition
| the total income in the economy that remains after paying for consumption and government purchases |
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Term
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Definition
| Formula for national saving: |
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Term
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Definition
| the income that households have left after paying for taxes and consumption |
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Term
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Definition
| Formula for private saving: |
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Term
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Definition
| the tax revenue that the government has left after paying for its spending |
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Term
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Definition
| Formula for public spending: |
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Term
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Definition
| an excess of tax revenue over government spending; if T > G |
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Term
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Definition
| a shortfall of tax revenue from government spending; if G > T |
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Term
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Definition
| saving must be equal to investment [just know this.] |
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Term
| Market for loanable funds |
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Definition
| the market in which those who want to save supply funds and those who want to borrow to invest demand funds |
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Term
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Definition
| source of the supply of loanable funds |
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Term
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Definition
| source of the demand for loanable funds |
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Term
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Definition
| a decrease in investment that results from government borrowing |
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Term
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Definition
| what government runs to reduce national saving and interest rate rises and investment falls |
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Term
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Definition
| what government runs that increases the supply of loanable funds, reduces the interest rate, and stimulates investment |
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