Term
Aggregate Demand represents: |
|
Definition
|
|
Term
A decrease in AD(shift) would be cause by: |
|
Definition
A decrease in total income. |
|
|
Term
The Aggregate Supply (AS) is: |
|
Definition
The relation between the overall price level and real GDP. |
|
|
Term
In the classical model, unemployment can be solved by: |
|
Definition
|
|
Term
The loanable funds or financial market ensures that: |
|
Definition
|
|
Term
According to Say's Law, if interest rates are flexible, |
|
Definition
Total Income=Consumption+Savings |
|
|
Term
According to the classical model, if Aggregate Demand declines, then |
|
Definition
Wages will fall, and aggregate supply will increase |
|
|
Term
In the long run, according to the classical model |
|
Definition
Aggregate Supply will be a vertical line at full employment |
|
|
Term
To cure a recession, the classical model would suggest: |
|
Definition
Waiting until the market cures itself |
|
|
Term
According to the Classical theory, the effect of government invtervention by increased AD would be: |
|
Definition
|
|
Term
According to the Classical Theory (Visualized by 3 Graphs), if there is a decline in AD, we would expect: |
|
Definition
An increase in the quantity invested. |
|
|
Term
THe Marginal Propensity to Consume equals: |
|
Definition
The change in consumption divided by the change in income |
|
|
Term
THe paradox of thrift refers to: |
|
Definition
Increased savings reduces the level of equilibrium. |
|
|
Term
John Maynard Kenyes was concerned that classical economics was: |
|
Definition
1)A special case based upon narrow assumptions.
2)Was a long term theory that may not apply to the short-run.
3)May lead to wrong prescriptions for action. |
|
|
Term
| According to Kenyes, savings was primarily determined by , while according to the classical model it was determined by . |
|
Definition
|
|
Term
If the MPS increases, the level of equilibrium income will: |
|
Definition
|
|
Term
According to Keynes, unemployment might last longer because: |
|
Definition
Wages are relatively inflexible. |
|
|
Term
| Which of the following Presidents had the largest Deficit as a share of GDP: |
|
Definition
|
|
Term
| Keynes was concerned about investment misbehaving. He worried that if consumption fell, |
|
Definition
Investment might decrease due to negative expectations. |
|
|
Term
| Keynes was concerned that as an economy grew or people became wealthier, the MPC might decline. This caused him to believe: |
|
Definition
Taxes on wealthier people should be higher.
|
|
|
Term
In the Keynesian cross model, if an economy is not at equilibrium because spending is lower than income: |
|
Definition
It must be at a point to the right of equilibrium income. |
|
|
Term
Counter Cyclical fiscal policy would suggest that if an economy was entering a period of inflation, the government should: |
|
Definition
Decrease Government spending. |
|
|
Term
Keynes favored spending changes over tax changes because: |
|
Definition
Spending has a more direct effect on the economy. |
|
|
Term
| According to the Keynesian theory (visualized in 3 graphs) if there is a decline in AD, we would expect: |
|
Definition
No change in the overall price level. |
|
|
Term
During the 2007 Great Recession, the MPC: |
|
Definition
|
|
Term
According to keynes, during a arecession he would expect: |
|
Definition
Decreased interest rates and decreased investment. |
|
|
Term
At the beginning of the great depression, Herbert Hoover raised taxes and decreased spending because: |
|
Definition
1)He was worried about the danger of inclation.
2)He wanted to let prices and wages fall.
3)He believed the economy would naturally recover. |
|
|
Term
Why did Douglas County Nevada want Walmart to relocate to a location in Douglas county?
|
|
Definition
Because it wanted a higher spending multiplier. |
|
|
Term
| Keynes was an economist during the Great Depression. During the Great Depression, there was: |
|
Definition
High Unemployment and High Deflation. |
|
|
Term
| As defined in the book, automatic stabilizers lead to changes in taxes and government spending as economic output varies. How do automatic stabilizers impact tax revenue and government spending during a recession: |
|
Definition
| Taxes will decrease, spending will increase. |
|
|
Term
| The opportunity cost for a student of attending college for a year is measured by: |
|
Definition
| The vale of all opportunities foregone by attending college. |
|
|
Term
| Measureing GDP caused people to reconisder the cause of the depression because it showed that: |
|
Definition
| Spending determined income and production. |
|
|
Term
| If the avg. prices paid for a market basket of products goes up by 10% whole the quantity purchased rose by 3% |
|
Definition
| Real GDP would rise by 3%. |
|
|
Term
| Currently, the US economy is below potential GDP. Therefore, |
|
Definition
| The US needs to increase actual GDP. |
|
|
Term
As noted in class, on 9/17 the Federal Reserve announced a new round of stimulus called Quantitative Easing III (QE3). The hope is that this will cause:
|
|
Definition
|
|
Term
| As noted in class, on 9/25 the consumer confidence index increased by 9 points. THis is important because: |
|
Definition
| It indicates that total demand may increase. |
|
|
Term
Adam Smith suggested that:
|
|
Definition
Barring obstacles, the economy tends to equilibrium. |
|
|
Term
|
Definition
An increase in supply will cause an increase in demand. |
|
|
Term
What is the definition of Recession: |
|
Definition
A decline in real GDP lasting for six months or more.
|
|
|
Term
|
Definition
The government running a deficit and borrowing from the financial sector. |
|
|
Term
|
Definition
Shows the relationship between GDP and unemployment. |
|
|
Term
THe unemployment rate equals: |
|
Definition
The number of unemployed divided by the labor force. |
|
|
Term
| Nominal GDP differs from Real GDP because nominal GDP calculates the value in terms of: |
|
Definition
The current year's prices of goods with the current year's quantity. |
|
|
Term
| According to the Phillips Curve, reducing unemployment tends to: |
|
Definition
|
|
Term
|
Definition
An increase in the price level. |
|
|
Term
The consumer price index measures: |
|
Definition
The price level of all goods and serives bought by a typical consumer. |
|
|
Term
The target rate of unemployment is: |
|
Definition
|
|
Term
| As discussed and shown in class, the labor force participation rate has |
|
Definition
Been going down over the past few years. |
|
|
Term
Structural unemployment is caused by: |
|
Definition
People losing a job because their skills are obsolete. |
|
|
Term
If a person is a full-time student, they would be counted as: |
|
Definition
|
|
Term
| If nominal wages rose by 10% while the price level rose by 15%, then real wages would: |
|
Definition
|
|
Term
An example of a cost push inflation would be: |
|
Definition
|
|
Term
Suppose a report on CNN says that there is an impending recession coming, as a result Bert's family as well as mony other likeminded families and individuals reduce their spending and instead start saving. THis is an example of: |
|
Definition
|
|
Term
The importance of an economic model is that it allows us to: |
|
Definition
Focus on the effects of one change at a time. |
|
|
Term
The official unemployment rate ignores (doesn't count): |
|
Definition
Discouraged workers who have given up looking for a job. |
|
|
Term
Sarah has just graduated as a lawyer from an esteemed law school, she is looking for a job and confident of getting a job but doesn't yet have one. She would be classified as: |
|
Definition
|
|
Term
An example of investment spending is: |
|
Definition
The purchase of a freezer by an ice cream shop. |
|
|
Term
| Economists sometimes have very different ideas about the economy, which of the ideas is most consistent with the classical idea of an economy as oppsed to the Keynesian: |
|
Definition
Government involvement in an economy is often more harful than beneficial. |
|
|
Term
|
Definition
Can be a result of natural job creation and destruction. |
|
|
