ECON 101 Final Review

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tinqqq
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ECON 101 Final Review
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2013-07-31 21:10:44
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economics
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  1. The inverse relation between price and the quantity demanded
    Law of Demand
  2. The direct relation between the price and the quantity supplied
    Law of Supply
  3. The negotiation between demand & supply that sets equilibrium in free markets.
    Price Mechanism
  4. A place where buyers & sellers meet, negotiate and exchange.
    Market
  5. Overproduction, due to the price being too high relative to the equilibrium price
    Surplus
  6. A system based on private property, free enterprise & competition
    Capitalism
  7. Another name for the "division of labor"
    Specialization
  8. The author of the "Wealth of Nations"
    Adam Smith
  9. The curve which indicates all the full production points for a nation
    Production Possibilities Curve
  10. Underproduction, due to the price being set below the equilibrium price
    Shortage
  11. The point of agreement between demand & supply in markets.
    Equilibrium
  12. A decline in the purchasing power of the dollar
    Inflation
  13. A reduction of real output for a half year or more
    Recession
  14. A price index which best reflects an average family's cost of living.
    Consumer's Price Index
  15. Policy which reduces the fluctuations of the economy
    Countercyclical
  16. The year in which nominal GDP equals real GDP
    Base year
  17. The lowest sustainable, non-inflationary rate of unemployment
    Natural Rate
  18. Indicated whenever Net Exports are negative
    Trade Deficit
  19. A specific labor skill or resource shortage
    Supply Shock
  20. Reflects the nation's average capacity to produce over time
    Trend
  21. The natural rate of unemployment
    Full Employment Rate of Unemployment
  22. A price index which best reflects costs of production
    Producer's Price Index
  23. The irregular fluctuation of economic activity over time
    Business Cycle
  24. Equals the difference between exports and imports
    Net exports
  25. Inversely related to the price level
    Purchasing Power of the $
  26. A rise in the average price level due to an increase in total spending.
    Demand Pull Inflation
  27. Rise in the average price level due to supply shocks
    Cost Push Inflation
  28. A reduction in a nation's real GDP for 1/2 year or more
    Recession
  29. Wrote "The General Theory"
    John Maynard Keynes
  30. States that a government should balance its budget cyclically by running surpluses in good years and deficits in bad years
    Functional Finance
  31. states that "supply creates its own demand"
    Say's Law
  32. Occurs when a government's net tax revenues equals its spending in one fiscal year
    Balanced Budget
  33. The negotiation between savors and investors in the market for loanable funds
    Interest Mechanism
  34. Two reasons why balancing the budget yearly is not optimal
    Weakens fiscal policy and procyclical
  35. Occurs when a government's net tax revenues are less than its spending in one fiscal year
    Budget Deficit
  36. An economic ideology emphasizing taking measures to increase the capacity of a nation to produce
    Supply Side Economics
  37. A standard of money based on faith
    Fiduciary Standard
  38. The ease with which an asset can be cashed or used as cash
    Liquidity
  39. The rate that banks charge their best corporate customers
    Prime Rate
  40. The rate that the Central Bank charges banks for loans
    Discount Rate
  41. The rate which is most sensitive to the Central Bank's buying or selling of government securities
    Federal Funds Rate
  42. The rate of change in the money supply due to a change in base money
    Money Multiplier
  43. The rate that banks charge each other for overnight loans
    Federal Funds Rate
  44. Nominal interest rates - inflation premium
    Real Interest Rates
  45. The Central Bank of the United States
    The Federal Reserve System
  46. The most important financial intermediaries
    Banks
  47. The liquid assets that banks hold beyond the required amount
    Excess Reserves
  48. Liquid assets inside banks + currency held outside banks
    Base Money
  49. Liquid assets that the banks must hold
    Required Reserves
  50. The largest component of M1
    Checkable Deposits
  51. The study of how we allocate our resources to satisfy our unlimited wants
    Economics
  52. Scare resources and unlimited wants
    Economizing Problem
  53. Labor (L) Capital (K) Land (N)
    Resources or inputs
  54. This curve shows the combination of output that a nation can produce given its resources and technology
    Production Possibilities Curve or the Transformation Curve
  55. Once all factors of production are at maximum output and efficiency, producing more will cost more than average
    Law of Increasing Costs
  56. Exchange of goods that does not involve the use of money
    Barter
  57. Movement along the demand curve caused by a change in price
    Change in quantity demanded
  58. Self interest leads to an increased standard of living in a nation
    Invisible Hand
  59. A shift in the entire curve, either left or right
    Change in Demand
  60. Movement along the supply curve caused by a change in price
    Change in Quantity Supplied
  61. A shift in the entire curve, either left or right
    Change in Supply
  62. The total value of all final goods and services produced within a nation in a year.
    Gross Domestic Product aka nominal GDP aka current $ GDP
  63. Values the production of goods and services at constant prices.  It is essentially the nominal GDP adjuster for an inflation/deflation
    Real GDP aka Constant $ GDP
  64. Goods that contribute value to a finished good
    Intermediate goods
  65. Goods that were already counted the year they were produced
    Resold Goods
  66. Goods produced and sold illicity
    Underground Economy
  67. Goods  produced and consumed at home but never enter the marketplace
    Household Contributions
  68. sales, excise, tariffs
    Indirect Business Taxes
  69. The income that household and noncorporate businesses have left over after satisfying all their obligations to the government
    Disposable Income
  70. A statistic that measures the average level of prices
    Price Index
  71. Measures the average price of all final goods and services
    Price Deflator
  72. A rise in the average (or general) price level over time
    Inflation
  73. A severe recession
    Depression
  74. Temporary unemployment caused by things like seasonality, looking for first jobs, people voluntarily between jobs
    Frictional Unemployment
  75. Unemployment for a longer duration and caused by a change in the patterns of demand for labor like new skills displacing old ones, people need to relocation, settle into other work or get re-education
    structural Unemployment
  76. Unemployment due to insufficient aggregate demand  People are not buying goods so employers are not hiring
    Cyclical unemployment
  77. Friction + Structural = Lowest sustainable noninflationary rate of unemployment
    Natural Rate of Employment aka Full Employment Rate of Unemployment
  78. Potential GDP - Actual GDP.  It measures the lost output (or income) due to this excess of wasted resources
    GDP Gap
  79. Policy which reduces the fluctuations of the economy
    Countercyclical Policy
  80. 1800s-1930s includes Say's law and interest mechanism
    Classical Economics
  81. Occurs when a government's net tax revenue is more than its spending
    Budget Surplus
  82. Accepted as payment for goods and services (and debts)
    Medium of Exchange
  83. The gold standard
    Commodity Standard
  84. Currency + checkable deposits + Traveler's checks
    M1
  85. M1 + small time and savings deposits
    M2
  86. Sets the reserve ratio
    Federal Reserve
  87. Tells banks the percentage of their deposits that they cannot lend or invest

    Required reserves / deposits
    Reserve ration aka reserve requirement
  88. Liquid assets held by banks (mostly in the form of cash)
    Reserves
  89. Liquid assets that banks must hold

    Reserve ration x deposits
    Required Reserves
  90. When a bank has loaned or invested all its excess reserves and has nothing left to lend
    Loaned up aka loaned out
  91. liquid assets inside banks and currency held outside banks
    base money aka monetary base

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