| Terms |
Definitions |
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Present Value
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A/(1+i)^n
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DPRK
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tripled industrial output, 1946-1949
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MC=
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changeTC / changeQwhere: changeTC always = VC
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full employment
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full employment (lowest possible unemployed rate with the economy growing and all facrors of production being used efficiently
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True
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T/F: Soviet managers of state-owned enterprises resisted innovation and sought not to exceed targets
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relative risk
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Variation in possible returns compared with the expected payoff amount
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Time Constraint
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h = N^S + l
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compliments
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ex/ burgers and beer. increase in price of one leads to decrease in demand of the other, vice versa
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Sole proprietor
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1) One owner2) Liable for everything
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Russia
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nation Kim II-sung rejected as too revisionist after 1953
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Total utility
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the total satisfaction a person recieves from consuming a particular quantity of a good
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When trade is allowed, the country with the ------- opportunity cost determines the slope of the combined PPC
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*lowest
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recession
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a decline in total production lasting at least two consecutive quarters, or at least six months
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elasticity of supply
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the percentage change in quantity supplied divided by the percentage change in price
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Self Interest
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buyers and sellers are focused on personal gain. It motivates consumers to buy the goods and services they want at the lowest prices possible
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inelastic
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if the price elasticity of demand is less than 1
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Short-Run Equilibrium
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-The condition that exists in the economy when the quantity demanded of Real GDP equals the (short-run) quantity supplied of Real GDP. -Where aggregate demand curve intersects short-run aggregate supply curve.
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decrease in supply
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price goes up quantity goes down
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Equilibrium Price
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The market price that once achieved remains constant until either the demand curve or supply curve shifts
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marginal utility
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the extra satisfaction derived by a consumer from the consumption of the last unit of a commodity
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fixed cost
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doesn't change no matter how much a good is produced.
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Most Common Measure for Studying the Affects of Money on the Economy
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M1 and M2
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The type of unemployment that is most affected by technological advances in a society is1)frictional2) cyclical3) structural4) Seasonal
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3) structural
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tax taht takes a larger percentage of higher incomes than of lower incomes
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progressive tax
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Optimal enforcement
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MB has a negative slope meaning that prevention has diminishing returns. Crimes that police go after first are the ones that are most costly to society. AS we add more resources the return is smaller.-Rank ordering of offenses is needed
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Normal good
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A good for which demand increases when income rises and decreases when income falls
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Medium of exchange
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Money is only worth what people are willing to pay for itEx: a woodcutter who wants shoes does not have to find a shoemaker who wants wood
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Calculation for Marginal Revenue
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Pn - (Pn-1-Pn)(n-1) OR (Pn)(Qn) - (Pn-1)(Qn-1) OR New Total Revenue minus previous Total Revenue. (All the same)
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Marginal Costs (define)
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how total costs change with each extra unit produced
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security (financial instrument)
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is a claim on the issuer's future income or assets (any financial claim or piece of property that is subject to ownership)
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futures contract
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agreement to buy or sell at a specific date in teh future at a predetermined price
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Effects of imports (who is helped/hurt?)
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ONLY IMPORT WHEN Pw<Pa
CS increases, PS decreases
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• How does public education affect the budget constraints of households who are contemplating spending between education and other goods? Does free public education necessarily lead to increases in educational spending?
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Crowds out private spending, some families may actually decrease education spending (to zero) and go to a higher indifference curve this way. Think top right corner of a square followed by diagonal line from bottom of this 180 degree-rotated L shape as far as what the edu/other spending ppf looks like for families. Free public education is crowding out private education
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marginal product of labor (MPL)
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increase in amount of output from one additional unit of labor.
MPL = ΔQ/ΔL = Δoutputs / Δlabor
(396, 18)
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European Free Trade Association
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he free trade area that was formed in 1960 by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden and Switzerland.
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which of the following real world circumstances existed during the decade of the 1970s that led to the replacement of Keynesian theory with the aggregate demand-aggregate supply model?
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the price level and the unemployment rate were both increasing
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quantity supplied
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the amount that sellers are willing and able to sell
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Suppose a firm is using two inputs, labor and capital. What will happen if the price of labor rises?
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A)* The firm's average cost curve will shift upward. B) The firm's marginal cost curve will remain unchanged. C) The firm will hire more workers for the same output. D) The firm’s total fixed cost curve will shift upward.
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Which of the following is one of the Five Fundamental Questions?
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What goods and services will be produced?
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M2 includes everything except ?
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BONDS
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Who compiles national reports of national income product accounts
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NIPA
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Largest Fraction of House Hold Spending is spent where?
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In Services
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Says law states...?
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supply creates its own demand
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which risk is not eliminated by diversity?
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Market Risk
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what works as an automatic stabilizer?
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progressive tax system
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laffer curve shows
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higher taxes lead to underground econimics rasing tax rates results in decrease tax revenue because people will work less
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A Negative Externality
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Pollution of air and rivers production or consumption cost inflictionon a third party
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Increase that wont close recessionary gap?
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an increase in imports
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When the feds buy bonds..?
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reserves increases, intrestrate goes down, investment spending rises, and aggret demand increases
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True for a shock
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Supply Shock or Demand Shock
From a fixed price
a decrease in sales
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Advances in inventory monitoring
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less severe factory orders because of closely monitered inventory & inventories are smaller
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Phillips curve shows ?
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shows the lower unemployment rate the higher the inflation rate
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False about leader/follower countries?
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follower country can grow faster then leaders1. Japan was a follower is now leader2. China is a follower
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Large reserves for $100
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banks do not like to hold reserves
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What did Gait 1947 do
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Set up world trade organization and got rid of tarriffs
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2007 B Quest article on why productivity jumped 42% in 2001 to 2004
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Bush ditched environment regulations and gave business the freedom to operate
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how does bureau of labor measure unemployment rate?
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random sample of 60,000 households
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a way to not measure GDP
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Adding all the transactions from all the banks will no measure GDP
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Problem preventing production of a public good
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Cannot rely on private enterprise to produce them. Creates a free rider problem
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Fords $5 a day in 1914?
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productivity went up 50% labor cost for cars only went up 35%
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What is an investment demand curve?
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the amount of investment that will occur with certain rates
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What would happen if everything was cheaper in mexico
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The peso would appreciate and the dollar would depreciate
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what are the two components of money demand?
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transaction demand and asset demand for money
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Per Capita growth from the roman empire - 1776?
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None till after 1776 when the steam engine was invented
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What is the natural rate of unemployment?
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there will always be a frictional and structural rate around 4.5%
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Not characteristic of US in last 7 years
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We have not exported more then we have imported
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given the reserve , how much will the money supply increase?
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20% of the reserve would mean half that
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