Term
|
Definition
| A legal price set below equilibrium. |
|
|
Term
| What are the three impacts of price ceilings? |
|
Definition
1) Shortages (rationing)
2) Black Markets (illegal / under the table)
3) Distortion of market signals and misallocation of resources |
|
|
Term
| What is a Price Support / Floor? |
|
Definition
A legal price set above the equilibrium price.
(The price cannot go any lower. It's the floor.) |
|
|
Term
| What are the impacts of price floors? |
|
Definition
1) Surplus (unemployes)
2) Surplus disposal or control required
3) Distortion of market signals and misallocation of resources |
|
|
Term
| What is a surplus disposal? |
|
Definition
| When the government buys up the surplus from a price support. |
|
|
Term
|
Definition
| When the government pays people not to produce a product. |
|
|
Term
| Why would the government instill a price support / floor? |
|
Definition
| Reasons are usually political. An example would be farms and how there are a lot of technological advances and supply increases WAY more than demand. |
|
|
Term
| What is an example of a price ceiling? |
|
Definition
| Rent control and healthcare |
|
|
Term
| What are the 3 levels of government? |
|
Definition
| Federal (national), State and Local |
|
|
Term
|
Definition
| A plan for expenditures and tax collections. |
|
|
Term
| What is a balanced budget? |
|
Definition
| Gov. Expenditures = Tax Revenues |
|
|
Term
| What is a Budget Surplus? |
|
Definition
| Where the tax revenue is GREATER than the government expenditures. |
|
|
Term
| What is a Budget Deficit? |
|
Definition
| Where the tax revenue is LESS than government expenditures. |
|
|
Term
| What is the federal budget deficit? |
|
Definition
|
|
Term
| What was the budget deficit for 2011? |
|
Definition
|
|
Term
| What are the top four things that the Federal Government spend their money on? |
|
Definition
1) Social Security and Medicare - 31%
2) National Defense - 21%
3) Social Programs and Income Security - 15%
4) Net Interest - 9% |
|
|
Term
| What are the top three things that the Federal Government collects taxes on? |
|
Definition
1) Individual Income Tax - 45%
2) Social Insurance Tax - 33%
3) Corporate Income Tax - 14% |
|
|
Term
| What are the top three things that State Governments spend on? |
|
Definition
1) Education - 36%
2) Public Welfare - 25%
3) Health and Hospitals - 8% |
|
|
Term
| What are the top three things that State Governments tax on? |
|
Definition
1) Sales and Excise - 48%
2) Personal Income Taxes - 34%
3) Corporate Income Taxes - 7% |
|
|
Term
| What are the top three things that Local Governments spend on? |
|
Definition
1) Education - 44%
2) Welfare, Health, Hospitals - 12%
3) Public Safety - 11% |
|
|
Term
| What are the top two things that Local Governments tax on? |
|
Definition
1) Property Taxes - 74%
2) Sales and Excise - 17% |
|
|
Term
| Who holds the National Debt? |
|
Definition
| Lots of people, institutions, and other countries. |
|
|
Term
| What is the difference between Treasury notes, bills, and bonds? |
|
Definition
| Their length of maturity. |
|
|
Term
| Who does the US Government owe? |
|
Definition
1) US Governments / Agencies - 28%
2) Debt held by the public (domestic) - 38%
3) Foreign Governments - 34%
(China, Japan, Brazil, UK) |
|
|
Term
| How do you measure how the economy is doing? |
|
Definition
|
|
Term
| What is the Gross Domestic Product (GDP)? |
|
Definition
The total market value of all FINAL goods and services produced in the US in a year.
(measures stuff produced) |
|
|
Term
| What is an intermediate good? |
|
Definition
| A good produced for furthur processing. |
|
|
Term
| What does Nominal GDP mean? |
|
Definition
| The current GDP in current prices; unadjusted for inflation. |
|
|
Term
| How much should the GDP grow every year in the short term? |
|
Definition
|
|
Term
| How much should the GDP grow in the long term? |
|
Definition
|
|
Term
| What is it called when the GDP only grows 1 to 2%? |
|
Definition
|
|
Term
|
Definition
| The GDP which has been adjusted for inflation and price level changes. |
|
|
Term
| What was the 2009 real GDP? |
|
Definition
|
|
Term
| How do you define a recession? |
|
Definition
| Two quarters of negative real GDP. |
|
|
Term
| When GPD falls, the growth rate will be ____. |
|
Definition
|
|
Term
| What are the GDP exclusions? |
|
Definition
1) Purely Financial Transactions ( like Social Security and buying and selling stocks and bonds)
2) Secondhand Sales ( like a car or home )
|
|
|
Term
| What is the equation for GDP? |
|
Definition
GDP = Consumption + Investment + Government + (Exports - Imports)
-or-
GDP = C + I + G + (X - M) |
|
|
Term
| What is the Investment part of GDP? |
|
Definition
1) New tools, equipment, machinery, + factories
2) Residential Investment
3) Changes in Inventory |
|
|
Term
| What is the largest component of GDP? |
|
Definition
|
|
Term
| What do households spend on? |
|
Definition
1) Durable Goods (11%)
2) Non-durable Goods ( 29%)
3) Services (60%) |
|
|
Term
|
Definition
| Something that has a life expectancy of over 1 year. |
|
|
Term
| What are some of the services that consumers spend on? |
|
Definition
| Utilities, entertainment, medical services, financial services |
|
|
Term
| What are the factors that determine consumer spending? |
|
Definition
1) Income
2) Prices
3) Wealth Effects
4) Credit Conditions
5) Taxes
6) Expectations |
|
|
Term
| What is disposable income? |
|
Definition
| Income after taxes have been taken out. |
|
|
Term
| What is the most important determinant of consumption? |
|
Definition
|
|
Term
| If you have higher prices, consumption will ____. |
|
Definition
|
|
Term
|
Definition
| Wealth is the accumulated wealth a person has; the value of financial assets ( like stock and retirement fund) and real assets (like a home and cars). |
|
|
Term
| What is the best measure of wealth? |
|
Definition
|
|
Term
|
Definition
| Value of assets minus the liabilities such as mortgages and credit card debt. |
|
|
Term
| If you owe more on a home than you can sell it for, you're considered ______. |
|
Definition
|
|
Term
| Avaliability of credit effects how much households spends. If there is tight credit and hgih rates, the consumption will ________. |
|
Definition
|
|
Term
| What are the components of Investment Spending? |
|
Definition
1) Spending by Businesses on new toolds, machinery and factories - 75%
2) Residential Investment - 25%
3) Changed in inventory - 3% |
|
|
Term
| Increases in inventory are ______ to GDP. |
|
Definition
|
|
Term
| Decreases in inventory are ______ from GDP. |
|
Definition
|
|
Term
| What is the most questionable (dubious) component of GDP? |
|
Definition
|
|
Term
| A higher interest rate means _______ investment. |
|
Definition
|
|
Term
| Are transfer payments, such as Social Security payments, included in Government Spending? |
|
Definition
|
|
Term
| What is the single most important source of productivity improvement? |
|
Definition
|
|
Term
| Who are our major EXPORT trading partners? |
|
Definition
1) Canada
2) Mexico
3) Japan |
|
|
Term
| Who are our major IMPORT trading partners? |
|
Definition
1) Canada
2) China
3) Mexico |
|
|
Term
| What are the shortcomings in GDP? |
|
Definition
1) Non-market transactions
2) Underground Economy
3) Leisure Activity
4) GDP and the Environment
5) Composition and Distribution
6) Quality Improvements
7) Per-Capita Output |
|
|
Term
| What are the Macroeconomic Goals? |
|
Definition
1. Economic Growth
2. Price Stability
3. Full Employment |
|
|
Term
| What is the formula for Per-Capita Output? |
|
Definition
Real GDP / Population
Real GDP per person :) |
|
|
Term
| Why is the US good at producing stuff? |
|
Definition
| We have high worker productivity. |
|
|
