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Shortage
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Equilbrium Quantity
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Supply Schedule
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positive gdp growth
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expansion
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c1 =
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propsensity to consume
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Shift In Demand
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Taste, Substitute/Complement, Expectations, # of buyers, Income
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G
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government spending. purchases of goods and services by federal, state and local governments. office equipment, airplanes, etc.
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financial intermediaries
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financial institutions through which savers can indirectly provide funds to borrows
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Normative Economics
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Economic analysis that makes recommendatins about economic policy
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menu costs
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the costs of changing prices
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intermediate good
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used up in the production
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distribution
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the allocation of products and resources among people
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structural unemployment
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unemployment that arises because people's skills, experience, education and/or location do not match what employers need
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discretionary fiscal policy
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the deliberate manipulation of government purchases, taxation, and transfer payments to promote macroeconomic goals, such as employment, price stability, and economic growth
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unemployment insurance
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a government program that partially protects worker's income when they become unemployed
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balance sheet
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a financial statement that shows assets, liabilities, and net worth at a given point in time, all these are stock measures
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Seasonal Unemployment:
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Unemployment due to seasonal changes in employment or labor supplies.
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Financial Markets
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banks and other financial institutions that facillitate the flow of funds from savers to borrowers
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classical dichotomy
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the theoretical separation of nominal and real variables
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automatic stabilizers
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tax and spending institutions that tend to increase government revenues and raise government spending during economic recessions
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World Bank
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an international agency charged with promoting economic development, through loans and other programs
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planned investment
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the amount of investment that firms plan to undertake during a year
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Positive Economics
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Economic explains what happens in econ and why; without making recommendations about economic policy
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Employment
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Is the number of people who currently hold full-time or part-time jobs.
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GDP
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The total market value of all the final goods and services produced WITHIN a nation's borders in a given time period.
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Economic Interactions
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Exchange of goods and services between people
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behavioral equation
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indicates some sort of behavior. i.e. consumption
C = C (Yd)
+
As disposable income goes up, so does consumption.
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environmental service function
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the provision by the natural environment of the ecosystem services that support and enhance life
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Ceteris Peribus
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other things equal or all else constant
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current account
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in the BOP account, the national account that tracks inflows and outflows arising from international trade, transfers and earnings
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inflation
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a rise in the general level of prices
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secondary sector
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the sector of the economy that involves converting the outputs of the primary sector into products suitable for use or consumption. it includes manufacturing, construction and utilities.
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trade related subsidies
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payments given to producers to encourage more production, either for export or as a substitute for imports
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post-Keynesian macroeconomics
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a school that stresses the importance of history and uncertainty in determining macroeconomic outcomes
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simple money multiplier
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the reciprocal of the required reserve ration, the max multiple of fresh reserves by which the money supply can increase
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Economical Model
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Explanation of how the economy or part of the economoy works
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Barter Economy
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The direct exchange of one good for another without the use of money.
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Monetary Policy
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The use of money and credit controls to influence macroeconomic outcomes.
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Freely Determined Prices
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Prices that are determined by the indivduals and firms interaction in markets
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social discount rate
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a discount rate that reflects social rather than market valuation of future costs and benefits; usually lower than the market discount rate
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gross investment
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all flows into the capital stock over a period of time
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waste products
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outputs that are not used either for consumption or in a further production process
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value added
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the value of what a producer sells less the value of the intermediate inputs it uses. this is equal to incomes paid out by the producer
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direct (or positive) relationship
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the relationship between two variables when an increase in one is associated with an increase in another
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expected real interest rate
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the nominal interest rate minus expected inflation
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trade ban
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a law preventing the import or export of goods or services
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fiat money
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a medium of exchange used as money because a government says it has value, and people accept it
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open market purchase
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the purchase of us government bonds by the FED to reduce the money supply
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GDP Per Capita:
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The total of GDP divided by the country's population.
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quantity theory of money
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a theory asserting that the quantity of money available determines the price level and the growth rate in the quantity of money available determines the inflatoin rate
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quantity theory of money
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the theory that money supply is directly related to nominal GDP
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division of labor
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a approach to production in which a process is broken down into smaller tasks, with each worker assigned only one or a few tasks
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complimentary good
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a good that is used along with another good
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real exchange rate
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the rate at which a person can trade the goods and services of 1 country for another
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Long Run Aggregate Supple Curve
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Changes in the aggregate supply level do NOT change the quantity of the aggregate supplied in long run.
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Why is growth so high?
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1. Reliable numbers? China is a communist country...
2. High capital and investment. 40-45% of output is investment. And then Many foreign firms are encouraged to come over and build factories, these are usually more productive than chinese firms, and thus a big boom in productivity is noticed. also Chinese firms learn from these foreign firms.
Also move from central planning to market economy happened in a slow, controlled transition unlike the slowdown experienced in other countries with similar transitions.
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bilateral development assistance
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aid or loans given by one country to another to promote development
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Two Types of Inflation:Demand Pull Inflation
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Inflation caused by sudden increase in aggregate demand.
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flexible (floating) exchange rate system
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a system in which exchange rates are determined by the forces of supply and demand
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Why no pre 1980s numbers for China? Or lacking unemployment?
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Not reliable data. This happens when you deal with communists.
In poor countries unemployment rates are very sketchy because many workers may opt to stay in agriculture than be unemployed, but theres no way to know for sure.
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