Economics 101: Understanding Capital, Scarcity, and Markets, Quizzes of Introduction to Macroeconomics

Download Economics 101: Understanding Capital, Scarcity, and Markets and more Quizzes Introduction to Macroeconomics in PDF only on Docsity! TERM 1 Example of Economic capital DEFINITION 1 an office workers computer TERM 2 the study of economics is primarily concerned with DEFINITION 2 choices which are made in seeking to use scarce resources efficiently TERM 3 the imposition of tax on beer will raise its price is a _______ statement DEFINITION 3 positive TERM 4 taxes should be imposed on beer because college students drink too much is a _________ statement DEFINITION 4 normative TERM 5 3 examples of an essential element of a capitalist (market) economy DEFINITION 5 1. private property rights 2. decentralize-decision making 3. self-interest as an incentive for exchange TERM 6 1 example of what is not an essential element of a capitalist (market) economy DEFINITION 6 government determination of what is produced TERM 7 1 way to produced a rightward shift in a production possibilities frontier DEFINITION 7 increase the quantity of a nation's resources TERM 8 a point inside the PPF is DEFINITION 8 inefficient use of the economy's resources TERM 9 3 Major macroeconomic policy goals of most industrialized nations DEFINITION 9 1. full employment 2. price stability 3. economic growth TERM 10 going from an inefficient use of resources to an efficient use of resources would be illustrated by DEFINITION 10 moving from a point inside the PPF to a point on the PPF TERM 21 inflation DEFINITION 21 increase in the average level of prices of goods and services over time TERM 22 salary increase of 3% but goods and services increase 6% DEFINITION 22 higher nominal income but lower real income TERM 23 CPI was 122.0 in '88 and 135.7 in '89 Inflation rate for '89 is... DEFINITION 23 11.2 current - previous / previous x 100 TERM 24 Gross Domestic Product (GDP) is calculated by DEFINITION 24 C+G+I+(ex-im*) *can be a negative number (2-3) = -1 TERM 25 Net Domestic Product (NDP) is calculated by DEFINITION 25 GDP - Depreciation TERM 26 GDP measures DEFINITION 26 total market value of final goods and service produced within the US TERM 27 ceteris paribus, an increase in the domestic price level causes DEFINITION 27 increase in quantity demanded of imports and a decrease in the quantity demanded of exports TERM 28 Long-run aggregate supply (LRAS) curve is DEFINITION 28 vertical at natural real GDP, or potential output TERM 29 Lrong-run agregate supply (LRAS) is not DEFINITION 29 vertical at short-run equilibrium real GDP horizontal at short- run equilibrium real GDP horizontal at natural real GDP, or potential output TERM 30 if LRAS is vertical and left of equilibrium then the economy DEFINITION 30 in an inflationary gap if labor market shortages put upward pressure on wages, then economy would be considered self regulating and the SRAS would shift left to compensate TERM 31 the SRAS curve is upward sloping, a dec. in AD (SRAS remains unchanged) results in a __ price level, __ output (real GDP), and _ DEFINITION 31 lower lower higher TERM 32 actual unemployment rate is less than the natural rate of unemployment, an DEFINITION 32 inflationary gap exists and actual real GDP is greater than natural real GDP TERM 33 economists that advocate a macroeconomic policy of laissez-faire DEFINITION 33 believe the economy is self-regulating and will automatically move to equilibrium at natural real GDP in the long run TERM 34 the idea that all that is produced will be purchased represents DEFINITION 34 Say's Law, supply creates its own demand TERM 35 in the classical model DEFINITION 35 the focus in on the long run, not the short run TERM 46 supply-side economist believe reductions in marginal tax rates can DEFINITION 46 increase incentives to work, save, and invest TERM 47 government expenditures are $4,600 billion and tax receipts are $4,500 billion, the result is a DEFINITION 47 $100 billion deficit TERM 48 if Mr. Bates moves $1,000 from his checking to his money market account DEFINITION 48 M1 decreases and M2 stays the same TERM 49 Using money prices to compare relative values of goods and services represents money functioning as a DEFINITION 49 unit of account TERM 50 M2 includes M1 plus DEFINITION 50 saving deposits money market accounts small denomination time deposits TERM 51 M2 includes M1 except DEFINITION 51 short-term US government securities TERM 52 If currency held by public is $200 billion, which of the following could be true so that the value of M1 is $810 billion DEFINITION 52 checkable deposits are $600 billion and traveler's checks are $10 billion TERM 53 Total bank reserves = DEFINITION 53 excess reserves + required reserves TERM 54 M1 DEFINITION 54 currency held by the public demand and other checkable deposits traveler's checks TERM 55 Total Bank reserves (TR) DEFINITION 55 cash in the bank's vault and deposits at the Federal Reserve Bank TERM 56 Required Reserves (RR) DEFINITION 56 the required reserve ratio x total deposits = r(D) TERM 57 Excess Reserves (ER) DEFINITION 57 TR - RR TERM 58 All other things equal, Banks can grow up to the value of their DEFINITION 58 excess reserves TERM 59 Federal Funds Rate DEFINITION 59 the rate of interest that one banks pays to another bank for an overnight loan of reserves TERM 60 Federal Open Marker Committee (FOMC) DEFINITION 60 7 members, appointed by the president of the US, plus 5 presidents of district reserve banks TERM 71 money market is in equilibrium. the Fed raises the discount rate and sells bonds on the open market, then DEFINITION 71 the money supply will decease and the interest rate will rise TERM 72 all other thing equal, as the price of a bond decreases, its yield DEFINITION 72 rises TERM 73 T/F Monetarist believe that predictable and stable expansion of the money supply adds stability to the economy DEFINITION 73 True TERM 74 T/F Monetarist believe that Congress should be very actively involved in managing and directing the economy DEFINITION 74 False. fuck congress. TERM 75 T/F There is very little difference between Monetarist and Keynesian schools of thought DEFINITION 75 False. There's a whole goddamn section on the difference. TERM 76 T/F Monetarist Theory was founded by John M. Keynes DEFINITION 76 False. founded by Milton Friedman TERM 77 Keynesian. increase in money supply will result in ____ in interest rates, a ____ in investment spending, and a ____ in aggregat DEFINITION 77 decrease increase increase