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- University of Texas - San Antonio
- Economics
- Economics 2003
- Rightmyer
- Final Exam Review
Final Exam Review
Economics 2003 with Rightmyer at University of Texas - San Antonio
About this deck
By: Luci Dumas
Created: 2011-07-05
Size: 54 flashcards
Views: 39
Created: 2011-07-05
Size: 54 flashcards
Views: 39
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RGDP
Real gross domestic product. The total value of all final goods and services produced in a given period adjusted for inflation.
Unemployment Rate
the percentage of people 16 yrs and older who want to work but are unable to find a job
Frictional unemployment
Unemployment from workers searching for suitable jobs and firms looking for suitable workers....people in between jobs
Structural unemployment
Unemployment that results from workers not having the skills to obtain long-term employment. Low-skilled workers etc.
Cyclical unemployment
Unemployment due to short term cyclical fluctuations in the economy. Like in a recession.
Natural Rate of unemployment
The "typical" unemployment rate. 5%
Minimum wage rate
Hourly wage rate set above the equilibrium wage
Efficiency wage model
Higher wages lead to greater productivity
Inflation
Rise in price level, decrease in purchasing power of money
Deflation
Decrease in price level, increase in purchasing power of money
CPI- Consumer Price Index
Measures the trend in the prices of certain goods and services purchased for consumption purposes.
Hyperinflation
extremely high rates of inflation for sustained periods of time
Menu costs
The costs imposed on a firm from changing listed prices
Shoe-leather cost
The cost incurred when individuals reduce their money holding because of inflation. People withdraw money more often.
Leading economic indicators
Factors that economists at the commerce dept have found typically change before changes in economic activity occur
Productivity
the amount of goods and services a worker can produce per hour
GDP
Gross domestic product. The measure of economic performance based on the value of all final goods & services produced within a country during a given period.
Real GDP
nominal GDP/ price-level index
Aggregate demand curve
graph that shows the inverse relationship between the price level and RGDP demanded
Aggregate Supply curve
the total quantity of final goods and services suppliers are willing and able to supply at a given price level
Short-run aggregate supply
Relationship between RGDP and price level when output prices can change but input prices are unable to adjust
Long-run aggregate supply
Relationship between RGDP and the price level when output prices and input prices can both fully adjust to economic change
Recessionary Gap
the output gap that occurs when the actual output is less than the potential output
Inflationary Gap
the output gap that occurs when the actual output is greater than the potential output
Expansionary Fiscal Policy
use of fiscal policy tools to foster increased output by increasing govt purchases, lowering taxes, and/ or increasing transfer payments
Contractionary Fiscal Policy
Use of fiscal policy tools to reduce output by decreasing govt purchases, increasing taxes, and/or reducing transfer payments
Progressive tax
A tax designed so that those with higher incomes pay a greater proportion of their income in taxes
Regressive tax
As a person's income rises the percentage that is taken out for taxes decreases
Excise tax
A sales tax on individual products such as alcohol, tobacco, and gasoline
Flat tax
A tax that charges all income earners the same percentage of their income
Multiplier effect
A chain reaction of additional income and purchases that results in total purchases that are greater than the initial increase in purchases
MPC
Marginal Propensity to consume. The additional consumption resulting from an additional dollar of disposable income
MPS
Marginal Propensity to save. The change in savings divided by the change in disposable income.
Supply-side policies
Reduction of individual and business taxes, deregulation, and increase in research and development to stimulate the economy
Money
Anything generally accepted in exchange for goods or services
Fiat money
A means of exhange established by govt declaration
Demand Deposits
Balances in bank accounts that depositors can access on demand
M1
The narrowest definition of money; includes currency, checkable deposits, and traveler's checks
M2
A broader definition of money that includes M1 plus savings deposits, time deposits, and non-institutional money market mutual fund shares.
Liquidity
the ease with which one asset can be converted into another asset into goods and services
Commercial Banks
Financial institutions organized to handle everyday financial transactions of businesses and households through demand deposits accounts & savings accounts, or by making loans
Reserve Requirements
Holds of assets at the bank or at the FED as mandated by the FED
Fractional Reserve System
a system that requires banks to hold reserves equal to some fraction of their checkable deposits. Currently 10%.
Required reserve ratio
the percentage of deposits that a bank must hold at the federal reserve bank or in bank vaults
Money Supply
How much money is in circulation at a given time.
Discount Rate
Interest rate that the FED charges commercial banks for the loans it extends to them
Federal Funds Market
Market in which banks provide short-term loans to other banks that need cash to meet reserve requirements
Tools for Reducing the Money supply
1. Sell Bonds
2. Raise reserve requirements
3. Raise the discount rate
2. Raise reserve requirements
3. Raise the discount rate
Tools for increasing the Money supply
1. Buy bonds
2. Lower reserve requirements
3. Lower the discount rate
2. Lower reserve requirements
3. Lower the discount rate
Money market
Market in which money demand and money supply determine the equilibrium interest rate
Velocity of Money (V)
a measure of how frequently money is turned over, avg. number a dollar is used in 1 year
Quantity Theory of Money and Prices
They increase or decrease at the same rate. 25% decrease in money supply & a 25% decrease in prices.
About this deck
By: Luci Dumas
Created: 2011-07-05
Size: 54 flashcards
Views: 39
Created: 2011-07-05
Size: 54 flashcards
Views: 39
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have used this website for three exams, and I see a huge difference in my test results.”
Naj
Naj