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  1. Ricardian equivalence theorem
    • government deficit do not matter under some conditions. 
    • taxation by government has no effect
  2. Interest rate and inflation
    Positively related. interest rate tracks inflation.
  3. real interest rate
    nominal interest rate minus inflation
  4. Current acoount surplus
    CA=net exports + net factor payments

    Government surplus and and current acount surplus move in opposite directions. 
  5. CAS=Ex-Im+NFP
  6. FED
    Rederal Reserve System
  7. Government deficit
    The negative of government surplus
  8. Government surplus
    taxes minus spending
  9. Keynesian
    government active role to smoth business cycles
  10. GNP=gross national product=
  11. Unemployment rate
    # unemployed/labor force
  12. Expenditure approach
    total spending on final goods
  13. Govn deficit
    negative govnm surplus
  14. Income appraouch
    all incomes received within a nation
  15. Inflation rate
    price level change during one period
  16. Product appraoch
    sum of value of goods and services
  17. When indiference curves are L shape?
    when S and L are perfect complements to each other
  18. The marginal product
    additional unit which can be produced by one additional unit of input
  19. Production function
    • Marginal product of labor declines in the sides
    • It increases when capital or labor increases or productivity
  20. When firm tries to max profit..
    it sets MPN equal to the real wage.
  21. Lump-sum TAX
    a tax that is unaffected by the actions of the cobnsumer or firm being taxed.
  22. Normal good
    income up = consumption up
  23. Marginal rate of transformation
    • negative slope of the PPF. Rate at which one good can be converted to another.
    • MRT= - slope PPF
  24. Pareto optimality
    cannot make sb better off without making another worse off
  25. Increase in government spending does what?
    shifts PPF down by amount spent. Negative effect on L and C so they both fall and unemployment rises. 
  26. Laffer curve
    the relationship between the tax revenue collected by the government and the tax rate
  27. Consumption smotthing
    Current income up =  C up = C' up = S up

    Future income up = C up =C' up.
  28. R increase does...
    reduction of prices in the future. so consumption less today, more in the future
  29. Ricardian
    taxes change does not affect consumers consumption
  30. Real interest rate
    return on savings in units of consumption goods.
Card Set:
2012-10-01 02:07:55

Knyga makro
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