Macroeconomics2

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Anonymous
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116900
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Macroeconomics2
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2011-11-14 22:46:33
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Macroeconomics
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Macroeconomics Mid Term
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  1. Business Cycle
    Non-perodic changes in general business and economic activity.
  2. Recession
    Income(Y), Output, Employment, and Prices go down.
  3. Durable Goods
    Goods that last a long time.
  4. Natural Unemployment
    Fictional Unemployment and Structural Unemployment
  5. Fictional Unemployment
    Short-term unemployment.
  6. Structural Unemployment
    Discrimination and having no skills.
  7. Cyclical Unemployment
    Unemployment due to a recession.
  8. Ofcuns Law
    For every 1% of unemployment (above 6%) the economy loses 2% GDP.
  9. What does unemployment affect?
    The GDP.
  10. Potential GDP
    The GDP when the economy is at full employment. (6% unemployment.)
  11. Actual GDP
    The GDP when the economy is over 6% unemployment.
  12. Equation for GDP gap?
    Potential GDP - Actual GDP = GDP gap
  13. Trade-Off
    Unemployment goes down, inflation goes up. (Phillips Curve)
  14. Deflation
    When the average level of prices go down.
  15. Inflation
    When the average level of prices go up.
  16. Disinflation
    Slower rate of inflation.
  17. CPI (What does it stand for and what does it mean?)
    CPI (Consumer Price Index): The price of living index.
  18. What does the government use to measure inflation?
    CPI (Consumer Price Index)
  19. PPI
    Producers Price Index
  20. Hyper Inflation
    Prices rise quickly.
  21. Creeping Inflation
    Rate goes up very slowly.
  22. Phillips Curve (Draw and define before seeing the definition)
    • Unemployment goes down, inflation goes up. (or vice-versa) (Also known as a Trade-off)
  23. Demand Pull Inflation
    • Demand curve shifts to the right.
    • Too much money, not enough production.
  24. Cost Push Inflation
    • Supply curve shifts to the left.
    • Prices go up.
  25. Creditor
    Lenders of money.
  26. Debtors
    Borrowers of money.
  27. Real Income
    How much you can buy with your money.
  28. Money Income
    Money illusion.
  29. Leading Indicator
    An indicator that tells us what happens before it happens. (Example: Stock Market Indicator)
  30. Coincident Indicator
    An indicator that tells whats happening currently. (Example: GDP Indicator)
  31. Lagging Indicator
    An indicator that take time to change. (Example: Unemployment Indicator)
  32. Aggregate Demand (AD)
    The sum of all planned expenditure.
  33. Aggregate Supply (AS)
    The sum of all planned production.
  34. Two policies that are reasons for shift in AD/AS curve.
    Fiscal policy and monetary policy.
  35. Fiscal Policy
    Government spending and taxes.
  36. Monetary Policy
    Increasing/decreasing money supply.
  37. Expectations Theory
    • Good expectations cause a shift to the right.
    • Bad expectations cause a shift to the left.
  38. Long-Run Planning
    Anything planned that's over a year.
  39. Short-Run Planning
    Anything planned up to a year.
  40. Keynesian SRAS (Attempt to draw the curve)
    • Income, output and jobs are all increasing.
    • Price is still staying the same.
    • Will shift to the intermediate SRAS after about 6 months.
    • Check your notebook to see if the curves match.
  41. Intermediate SRAS (Attempt to draw the curve)
    • Income, output, jobs, and prices are all going up.
    • Check your notebook to see if the curves match.
  42. Classical SRAS (Attempt to draw the curve)
    • Full employment, no room to expand. Full output. Income stays the same. Prices are going up. (Inflation)
    • Check your notebook to see if the curves match.
  43. Equation for Aggregate Demand (AD)
    C + I + G + Nx
  44. What does interest rate determine?
    How much people save and how much people invest.
  45. What does savings depend on?
    Your income. The higher the income, the more you'll be able to save.
  46. Equation for Average of Propensity to Consume?
    APC = C/Y
  47. Equation for Average of Propensity to Save?
    APS = S/Y
  48. Equation for MPC (Marginal Propensity to Consume)
    MPC = Change in C/Change in Y
  49. Equation for MPS (Marginal Propensity to Save)
    MPS = Change in S/Change in Y
  50. The circular flow consists of?
    Consumer Y, Business Receipts, and Factor Y
  51. What are leakage of money examples?
    Taxes, imports, savings
  52. Opposite of leakage?
    Injection.
  53. Example of injection?
    Investments.

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