| Terms |
Definitions |
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Net exports
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exports-imports
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Compliments
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Negative number
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taxes
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income
social insurances
corporate income
indirect
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Tarriff
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tax on imports
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expenditures
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transfer programs
goods and services
debt interest
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Nominal GDP
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Not inflation adjusted
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Real GDP
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not inflation adjusted
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inflation
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prices up, dollar worth less
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deflation
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prices down, dollar worth more
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tax revenue
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tax * quantity tax
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federal budget
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taxes and expenditures
deficit: expenditures - taxes
surplus: taxes greater than expenditures
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types of unemployment
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1. frictional
2. structural
3. cyclical
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Dcow
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double coincidence of wants, money solves this and turns into single coincidence of wants
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Externalites
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are third-party effects. when a another group is affected by the economic activity of others withouht market to price the effect
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M1
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most liquid money supply, currency in circulation, traveler's check, checking deposits
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frictional unemployment
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normal labor market turnover (people entering and exciting the market), firms created and destroyed
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full employment
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cyclical rate of unemployment = zero
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unemployed
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1. eligible to work
2. no job
3. actively pursuing work
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unions
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help members get higher wages with lower hours worked
1. fair wage
2. safe conditions
3. fair practices
4. grievance procedures
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end unemployment
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1. find a job
2. quit looking-discouraged worker
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Necessity Goods
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quantity demanded is NOT very responsive to changes in income
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CPI
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measures the average level of prices of the goods and services that a typical urban family buys
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Quota
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a proportional share assigned to a group or a member of a group; allotment; a maximum or fixed number or amount
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Not Binding
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Floor/ceiling doesn't affect price or quantity
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consumption smoothing
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borrow while poor, pay back while rich
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Elastic
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abs. value > 1; if price increases, total revenue decreases
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Luxury goods
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Goods with a Income Elasticity of Demand > 1
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Market basket
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stuff that is included in the calculation of CPI
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Public Goods
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goods that are neither excludable nor rival in consumption
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consumer surplus
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max amount you will pay - actual cost
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role of money
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1. medium of exchange
2. unit of account
3. store of value
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tools of monetary policy
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1. required reserve ratio
2. discount rate
3. open market operations
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sources of unemployment
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1. being fired
2. quit
3. enter or re-enter the job market
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What goes in to GDP
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Consumption spending + investment +government + net exports
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discount rate (DR)
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interest rate banks pay to borrow from the federal reserve (bank runs)
DR (i) loans (d) money supply (d) interest (i)
DR (d) loans (i) money supply (i) interest (d)
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Gift Tax
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a tax on a gift by a living person
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if the elasticity of supply is greater than the elasticity of demand...
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producers bear the burden
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Number of Substitutes
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Determines the E of D, The more items, the more elastic
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