Term
| What is aggregate demand? |
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Definition
| The amount demanded of all goods and services at different price levels, ceteris paribus. |
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Term
| Why does AD slope downward? |
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Definition
| Wealth or real balance effect. |
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Term
| What are some causes of aggregate demand? |
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Definition
1.When more or less goods are bought at the same price level.
2.Changes in money supply. |
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Term
| What is the Keynesian multiplier? |
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Definition
| Ratio of the change in the equilibrium level of income to the change in government spending. |
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Term
| What is Aggregate Supply? |
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Definition
The quantity supplied of all goods and services and different price levels, ceretis paribus.
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Term
| What are some reasons for AS curve shift? |
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Definition
1.Input Prices
2.Productivity
3. Legal or institutional environment
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Term
| How do you calculate unemployment rate? |
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Definition
| # of Unemployed/ Labor force x 100 |
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Term
| What are 3 types of unemployment? |
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Definition
| Frictional, Structural and Cyclical. |
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Term
| What is Frictional Unemployment? |
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Definition
| Unemployment due to Labor Turnover. |
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Term
| What is Structural Unemployment? |
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Definition
| Workers skills don't match what employers need or change in Technology. |
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Term
| What is cyclical Unemployment? |
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Definition
| Unemployment due to the business cycle. |
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Term
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Definition
| Unemployment with only frictional and structural Unemployment (no cyclical). |
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Term
| What are main causes of Unemployment? |
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Definition
1.Welfare legislation
2.Unemployment welfare
3.Minimum Wage Laws.
4.Pro-Labor Union Legislation. |
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Term
| What is Underconsumption? |
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Definition
| Consumption decreases and since it is the largest component of spending money, business profits decrease and business activity contracts as a result. |
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Term
| What is the real business cycle theory? |
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Definition
| Says that the business cycle emanates from the supply side, not demand. |
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Term
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Definition
| The study of the production of wealth in a division of labor society. |
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Term
| What is a division of labor? |
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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. |
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Term
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Definition
| Material goods made by humans. |
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Term
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Definition
| The desire for wealth and labor is greater than the supply available. |
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Term
| What is the art of economic thinking? |
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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. |
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Term
| What can you gain from a division of labor? |
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Definition
1.Economies of learning and motion.
2.Perfect one task.
3.Multiplication of knowledge.
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Term
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Definition
| Being concerned with one's self and acting in a long range manner through the use of one's own mind. |
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Term
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Definition
| To give up a greater value to obtain a lesser value for others. |
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Term
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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. |
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Term
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Definition
| Totalitarian system of government in which a single ruling party controls state-owned means of production. |
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Term
| What is productive spending? |
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Definition
| Spending engaged in for the purpose of making subsequent sales. |
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Term
| What is consumptive spending? |
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Definition
| Spending for ones self, not for the purpose of subsequent sales. |
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Term
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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).
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Term
| What are some problems with GDP? |
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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. |
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Term
| What is Gross national revenue? |
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Definition
| Equals total productive and consumptive spending. |
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Term
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Definition
| Sustained rise in the general price level. |
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Term
| What are effects of inflation of the money supply? |
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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. |
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Term
| How do you calculate unemployment rate? |
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Definition
| Number unemplyed/Labor Force x 100 |
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Term
| What is the real business cycle theory? |
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Definition
| Says business cycle emanates from the supply side, not demand. |
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Term
| What can't Real business cycle theory come from the supply side? |
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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. |
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Term
| What is the Business or trade cycle? |
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Definition
| Fluctuation, over time, of economic activity. |
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Term
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Definition
| Changes in government expenditures and/or taxes to achieve particular economic goals. |
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Term
| Why doesn't an increase in government spending automatically increase demand in ecomony? |
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Definition
1. Only increases spending if government inflates the money supply.
2.If government borrows from public,public has less money to spend. |
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Term
| What are some detrimental effects of increased government spending? |
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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. |
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Term
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Definition
| Debt is the accumulated amount of borrowing. |
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Term
| What is government deficit? |
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Definition
| Occurs when total spending exceeds tax revenues during a given period. |
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Term
| What is the difference between Nominal vs. Real GDP? |
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Definition
| Nominal is prices of products within the year and Real GDP also accounts for inflation. |
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