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Macro notes Bergen CC WRT 201
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  • Title: Macro notes
  • Type: Notes
  • School: Bergen CC
  • Course: WRT 201
  • Term: Spring

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notes Macro Research of markets overall Democracy---Market economy- individuals own means of production ..what we need to produce Land, transportation, telephone etc Command system Entity 1 unit Political party, government Secondary manufacturing Laissez Faire strong exploit weak Health and safety laws modified through government intervention Labor force- 16+ gainfully employed or actively seeking work Keynes- should not intervene with economy cost would be too high Cost- sacrifice to obtain Depression- Unemployment rate rose 24.9% or inflation Economy and war Contracts once war is over Produce civilian products Integrated into economy EMPLOYMENT ACT OF 1946 1. full employment 2. price stability 3. economic growth (expanding to accommodate natural growth of population (Fiscal policy)- government's power to collect and spend tax money to counter what's happening ---spend more / cut back Federal reserve system (monetary policy) ...expand or contract supply of money GDP- value of all the goods and services produced in a country in a year at market and at final price (destination) (food/restaurant= service) Recession- 2 1/4s for 6 months at a time the economy is retracting Gross national product- GDP + anything produced by American companies and any American products in other countries Contract after war Consumer price index- measurement of consumer price changes at retail level Producer price index- measurement of avg. price changes at the level before retail New housing starts- how may new houses or units were started or begun in the month Leading economic indicators- one index made up of 10 indexes idea of what will happen in the future Merchandise trade balance- measures goods. 10 biggest exports and imports Federal fund rate- minimum 1 bank has to pay to borrow money from another bank (since 1913) Discount rate- banks borrow from federal reserve Raising interest---less borrowing Banks will only lend if rates make it worthwhile low risk Rate of interest Determine 1. availability 2. liquidity how quickly and cheaply an asset can be converted to money 3. risk- chance you will not get money back. Can't be insured prime rate- lowest rate available commercially banks charge their best commercial customer lowest rate US gov't never late in paying loans national debt Fiscal- gov't ability to collect money and spend Critical thinkingAnalysis- take a part and simplify to better understand 1. 2. 3. 4. define the problem set out possible solutions select solution best suited. Opportunity to change check selection against reality current dollar- buying power of the dollar in the year the figures were collected nominal- current dollars constant real dollar- buying power of the dollar in a specific year chosen as the base m1- made up of cash and demand deposits (checking accounts) transaction accounts productivity- measurement of output related to at least 2 types of input labor and time capital- physical or capital goods any man made object designed to allow a worker to produce more with it than he or she could use without it. Marginal analysis last unit you add or subtract Model- simplification reality, of showing the most important parts and how these elements work together Positive eco- things as they are Normative- things as they ought to be 4 factors of production 1. land/natural resources- rent 2. labor physical wages 3.capital goods interest 4. entrepreneurial ability-profit Sees possibilities to make something out of it 6 facilitating features for economy 1. adequate rate of tech. advance 2. capital formation- replace capital as it wears out (widening)- more capital in year 2 than year one... (deepening) ratio of capital to labor increases 3. specialization- concentrate on a narrow area master and do well 4. exchange- giving up extra we have for things we are not producing 5. money median of exchange double coincidence of want. Store of value 6. society that recognizes and even rewards economic success. Opportunity cost- next best choice not chosen Income distribution Functional indicates how the nation's earned income is apportioned among wages , rents, interest, and profits Proprietor- owns and runs his own business Personal distribution- which groups of economy get how much Lorenz curve- a curve showing the distribution of income in an economy,. The cumulated percentage of families (income receivers) is measured along the horizontal axis and cumulated percent of income is measured along the vertical axis. 1313 Ability to pay- taxation Transfer payment-payment made or received but not for any service or good Public- aid independent children PrivateSubsity part of cost paid by 3rd party ( food stamps) medicare Consumption spending- households- consumption , goods and services, gov't spending Business- investment All 3-aggregate spending total output of economy GDP Durable goods- last more than 3 yrs Private sector Public- plant- physical establishment Firm- business organization Industry- groups of firms Firms merge Vertical- plants that perform diff functions in the various stages of the production process Ex. Shell owns oil fields, refineries, gas stations Horizontal- firms of the same level merge (produce same thing) Conglomerate- plants that produce products in several industries ex. Pfizer (prescriptions, gum) Diversification Divesting- get ride of extra risks, interest Partnerships- 2 + individuals own business Corporation- acquire resources, own assets Corporations provide limited liability- stockholders who risk only what they paid for their stock Public sector- gov't role- provide law and order, legal structure, maintaing competition , redistribution of income- transfer payments, market intervention, taxation Reallocating resources Spillover/externalities- expect certain results, receive extra results pos or neg Public goods and services Promoting stablility Unemployment Inflation Budget- itemized list of anticipated revenues and expenditures in a given time period Tax- compulsory payment to gov't Direct- income Progressive tax- income in a direction the percentage paid in taxes moves in same direction Proportional income ratio stays the same Regressive- as income moves in a direction, percentage paid in tax moves in opposite direction

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