Term
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Definition
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Term
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Definition
Change in price of related goods/services
Change in income
Change in tastes
Change in expectations
Change in the number of consumers |
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Term
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Definition
Change in input prices
Change in the prices of related goods/services
Change in technology
Change in expectations
Change in numbers of producers |
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Term
| Sources of comparative advantage |
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Definition
Differences in climate
Differences in factor endowments
Differences in technology
Differences in institutions |
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Term
| Effects of imports (who is helped/hurt?) |
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Definition
ONLY IMPORT WHEN Pw<Pa
CS increases, PS decreases |
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Term
| Effects of exports (who is helped/hurt?) |
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Definition
ONLY EXPORT WHEN Pw>Pa
Producers are helped, consumers are hurt
TS increases |
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Term
| Effects of a tariff, quota |
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Definition
Imports decrease
Total surplus decreases
DWL is created |
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Term
| GDP: Value-added approach |
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Definition
| Sum of all the value added in production minus intermediate inputs |
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Term
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Definition
| GDP=income+interest+rent+profits |
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Term
| GDP: Expenditure approach |
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Definition
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Term
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Definition
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Term
| Real GDP (in terms of the deflator?) |
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Definition
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Term
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Definition
| Unemployment because workers take time in a job search |
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Term
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Definition
| Unemployment that occurs when there are more people searching for a job than at the current wage. This is the result of minimum wages and typically occurs in a single market (auto workers) |
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Term
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Definition
| Deviation of actual unemployment from natural unemployment |
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Term
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Definition
| Frictional + structural unemployment |
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Term
| Shifters of the natural rate of unemployment? |
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Definition
Changes in labor force characteristics (women, children)
Changes in labor market institutions (unions)
Changes in government policies (min wage) |
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Term
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Definition
Unit-of-account costs
Shoe leather costs
Menu costs |
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Term
| Factors leading to different growth rates between countries |
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Definition
Rates of investment in physical capital
Rates of investment in human capital (education)
Rates of technological improvement
Different levels of infrastructure
Political (in)stability |
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Term
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Definition
| Differences in rGDP per capita tend to narrow overtime because less developed countries have higher growth rates than more developed countries |
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Term
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Definition
| Amount between 45degree line and Lorenz curve / .5 |
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Term
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Definition
| Private savings + budget balance |
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Term
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Definition
| Disposable income - consumption |
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Term
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Definition
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Term
| Shifters of DEMAND for LOANABLE FUNDS |
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Definition
Changes in perceived business opportunities
Changes in govt borrowing |
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Term
| Shifters of SUPPLY of LOANABLE FUNDS |
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Definition
Changes in private savings behavior
Changes in public savings
Changes in capital inflows
Changes in expected profitability of lending |
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Term
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Definition
| Nominal interest rate - inflation |
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Term
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Definition
| The expected real interest rate is unaffected by changes in the expected inflation rate |
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Term
| Aggregate expenditure shifters |
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Definition
| Changes in expected future disposable income Changes in aggregate wealth Changes in price level |
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Term
| Shifters of AGGREGATE DEMAND |
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Definition
Changes in expectations
Changes in wealth
Changes in capital stock
Changes in fiscal/monetary policy |
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Term
| Shifters of SR AGGREGATE SUPPLY |
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Definition
Anything that affects productivity!:
Changes in input/commodity prices
Changes in nominal wages
Changes in productivity |
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Term
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Definition
| Currency in circulation, checkable deposits, and travelers checks |
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Term
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Definition
| Bank reserves and currency in circulation |
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Term
| Potential Money Multiplier |
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Definition
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Term
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Definition
| Ratio of money supply to monetary base |
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Term
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Definition
Changes in aggregate price level (inflation)
Changes in rGDP
Changes in technology (of money)
Changes in institutions |
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Term
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Definition
| Just the Fed (it is fixed) |
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Term
| Increase the money supply |
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Definition
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Term
| Decrease the money supply |
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Definition
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Term
| Decrease in interest rate leads to: |
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Definition
Increase in I
Shifts AEp UP
Increases rGDP
Increases C
Shifts AD right |
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Term
| Taylor rule for monetary policy |
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Definition
| -FFR= 1+ (1.5*inflation rate) +(.5*output gap) |
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Term
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Definition
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Term
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Definition
| The reduction in value of money held in cash as a result of inflation |
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Term
| Unemployment below the NAIRU leads to |
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Definition
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Term
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Definition
| The Fed can no longer use monetary policy effectively because interest rates are close to zero (the zero bound) |
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Term
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Definition
| SRAS is vertical, changes in AD have no effect on output |
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Term
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Definition
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Term
| Balance of payments on the current account |
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Definition
| Balance of all trade in goods and services plus net international transfer payments and factor income |
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Term
| Balance of payments on the financial account |
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Definition
| Domestic assets bought by foreigners - foreign assets bought by domestic citizens |
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Term
| More people want to invest in the US |
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Definition
| Demand for dollars increases |
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Term
| More Americans want to invest abroad |
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Definition
| Supply of dollars increases on the international market |
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Term
| Ways to fix an exchange rate |
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Definition
Buy/sell domestic currency on the foreign market using foreign exchange reserves
Use monetary policy |
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Term
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Definition
| Exchange rate that makes a given basket of goods equally expensive in two countries. |
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