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Macroeconomics
First Exam
33
Economics
Undergraduate 2
02/20/2012

Additional Economics Flashcards

 


 

Cards

Term
Macroeconomics vs. Microeconomics
Definition
These are the two major fields of economics.
Micro- Individual and firm behavior e.g. why less is more
Macro- Broad picture of the economy e.g. trade deficit
Term
Normative vs. Positive economics
Definition
Normative economics is based on opinions, while Positive economics is based on facts.
Term
Opportunity cost
Definition
Best forgone alternative choice.
Term
Scarcity
Definition
when humans want to exceed our abilities to produce the goods and services demanded.
Term
Solving for the Equation of a Line
Definition
Y=a+mx
(Y=Dependent variable, A=Vertical interception, M=Slope, X=Independent variable)
The slope of a line = vertical change / horizontal change.
Page. 18
Term
Maximizers Vs. Satisficers
Definition
These are types of buyers;
Maximizers- seek most or all info about all consumer choices, too many choices bring us down.
Satificers- tend to be satisfied with good enough.
Term
What do Economists Agree on?
Definition
1. economists don't believe in wage control.
2. Globalization is a good thing.
3. Fiscal policy has a place to play in the business cycle.
4. The united states should be eliminate agricultural sub cities.
5. Government should eliminate sports franchises.
6. The federal balance should be balanced.
7.We need to fix social security.
Term
Macroeconomics Goals
Definition
1.Full Employment
2.Sustainable budget
3.Economic growth
4.Low levels of inflation
Term
Who was Adam Smith?
Definition
He is the Father of economics.
Term
What are the Pitfalls of Capitalism
Definition
Greed, informal society, trust
Term
Solve for Opportunity Cost
Definition
Opportunity Cost = # of units Given up / # of units received
Page: 24
Term
Understand the Production possibilities Frontier (PPF-Curve)
Definition
This illustrates the maximum amount of output that a country can produce given its current amount of resources available.
Can Grow with growth or shrink with decrease.
Term
Proper Roles of Government
Definition
6 Roles of the Government:

1.Protect citizens from foreign invasion
2.Protect citizens from one another with private property laws
3.Provide public goods like schools, roads, defense, and bridges
4.Promote competition with international trade and anti-monopoly laws
5.To create a stable and common money supply
6.Protect the public from financial crises by authorizing financial regulation on information and the banking sector
Term
Types Of Capitalism
Definition
4 Types of Capitalism:
1.State Guided - Government has a significant role within the economy; some success.
2.Oligarchic - Bulk of power and wealth is held by a small group of people and families; worst kind.
3.Big Firm - Most significant economic activities are carried out by established giant enterprises; good growth but flattens out.
4.Entrepreneurial - Small innovative firms; good outcomes but difficult.
Term
Determinants of Economic Growth
Definition
Economic Growth depends on the GDP (gross domestic product) and the equation for it is:
GDP=C+I+G+NX
(C=Household Consumption;I=Investment;G=Government Spending;NX=Net Exports(Exports-Imports))
Term
History, Characteristics, Benefits of Economic Growth
Definition
Benefits of growth include, reduction in poverty, longer lifespans, higher educational attainment, and raised immunization to disease.
The economy boomed after 1820 because humans moved from hunting and gathering to specialization. It grew exponentially since then.
The characteristics of growth is supposed to wave in an upward fashion with times of gain and loss.
Term
Why Do People Oppose Growth?
Definition
business cycle stability, Malthusian "limits of growth", Currency uncertainties, Global Income Inequality, Structural change.
Term
The Box
Definition
The book by Marc Levingston that talked about how the world economy got smaller due to the giant ports that they are building
Term
What Determines Welfare/Happiness
Definition
The people's standard of living determines their happiness. The Gini Coefficient measures the equality of income distribution in the country.
Term
Jared Diamond and Why Societies Collapse
Definition
environmental components, and in some cases also contributions of climate change, hostile neighbors, and trade partners.
Term
Three Types of Firms and Their Characteristics
Definition
Three types of Firms:
1. Sole Proprietorship - This is when one person runs a business. You can work as your own boss and you can start up quickly and cheaply. You also have unlimited liability.
2.Partnership - Businesses that are operated by two or more people. You can start up quickly and greater financial resources are available thank sole proprietorship.
3.Corporation - A type of business that has its own legal identity. It is easier to raise money, and there is limited liability. They are complicated and expensive to form, and they are double taxed.
Term
Four Industries and Their Characteristics
Definition
4 types of Industries:
1.Perfect competition - this is the most competitive type of industry with many different firms, the firm has no price control, market freedom. (Gas station)
2.Monopolistic competition - Several firms that produce similar products, firms have little price control. (products lasting 5-10 years)
3.Oligopoly - Small number of firms (3-10) products are often highly-differentiated, firms have significant control over prices. (breakfast cereals)
4.Monopoly - One firm that produces a good for which there are no substitutes. The firm sets the price, and nobody can enter the market. (public utilities)
Term
How the Economy Works: Circular Flow of the Economy
Definition
The Circular flow diagram PG. 71
Explains how the the economy flows.
Term
Federal and State Government spending and revenue sources.
Definition
A lot of the Federal government spending goes towards Social security, Medicare and Medicade, and the Defense Department. A lot of the revenue comes from taxes out of income of the citizens.
Term
Say's Law
Definition
Output equals income:
Say's law states that supply creates demand
Term
Who was John Maynard Keynes
Definition
economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments.
He also had a lot to do with the modern business cycle and fiscal and monetary policies.
Term
The Three main macroeconomic concerns
Definition
1. Growth
2.Inflation - sustained rise in the overall price level.
3.Unemployment
Term
Understand fiscal and monetary policy
... When to use each
Definition
Fiscal Policy - can be thought of as when the federal government changes taxes or the amount of spending to achieve a particular outcome.
Monetary policy - Occurs when the U.S. Federal Reserve Bank changes the money supply and interest rates in the economy.
Term
GDP definition and equation
Definition
GDP=C+I+G+NX
GDP is the gross domestic product or the total value of all production produced within our borders for a given time period.
Term
Okun's Law
Definition
1% raise in unemployment = 2% loss in GDP growth.
Term
Misery Index
Definition
Unemployment rate + Inflation rate.
Term
The Business Cycle and its impact on industry
Definition
The business cycle has a peak, a trough, and a recovery phase.
Term
Unemployment rate
Definition
9.6 percent
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