MACROECONOMICS
growth rate in gdp
(14672.9 / 98.507) x 100=$ 14895.3
inflation rate
(price actual- price past) % ( price past)= * 100 =
deflation
-Price level FALLS
losers
3rd national a bank that loaned many people money for home purchase
what is a COLA?
A cost of living adjustment
inflation
A general and progressive increase in prices
inflation
A general and progressive increase in prices an increase in the overall price level.
recession
A slowdown in a nation's economy A period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters.
advantage
Benefit
macroeconomics
Concentrates on the operation of a nation's economy as a whole. analyses the economy as a whole. For example it considers the overall numbers employed in an economy. It deals therefore with topics such as inflation, unemployment, economic growth and international trade.
opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
unit of account cost
Costs of Inflation
income approach
GDP measured by all in the economy
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
GNP
Gross National Product
trough
Lowest point of a wave
price stability
People want to keep prices stable and limit inflation because with high inflation, people are forced to pay more for food, clothing, supplies, etc. This is especially harmful to people on a fixed income. Sometimes high inflation can also discourage business activity - just becomes too cost
microeconomics
Study of a single factor of an economy - such as individuals, households, businesses, & industries - rather than an economy as a whole.
comparative advantage
The ability of a country or firm to produce a particular good or service more efficiently than other goods or services, such that its resources are most efficiently employed in this activity. The comparison is to the efficiency of other economic activities the actor might undertake, not to the efficiency of other countries or firms.
the paradox of thrift
When people decide to save more of their income, which reduces aggregate demand, which can cause recessions is called
positive economics
a decrease in the supply of coconut will increase the price of german chocolate cake, a good which requires coconut shavings as a key ingredient
definition of inflation
a general and ongoing rise in the average level of prices in an economy.
false
a nation will not have a comparative advantage in a production if t does not also have an absolute advantage in the production of that good.
false
absolute advantage is the source of the potential gains from specialization and trade.
most accurately characterizes the method used to calculate inflation
analysts measure the cost of a bundle of goods representative of overall spending at two points in time and compare the difference in cost.
inflation power
because more inflation will lead to lower buying power
true
countries specialize in the production of goods for with they have a comparative advantage.
is not in the area of microeconomic study
does hosting the Olympics decrease the unemployment rate?
example of shoe leather cost
due to the high inflation rate, you spend time on the computer every day transferring money from an account with higher yield that compensates you for higher inflation to your checking account that does not.
losers
herb, who keeps his saving in an old coffee can.
increases GDP but not the standard of living
household unpaid work becomes formalized in GDP
expansion
in increase in size and power, A period of economic growth as measured by a rise in real GD.
example of Menu costs
in response to unexpectedly high inflation, the manager of the restaurant has to print a new catalogue of new prices
Does not increase GDP but increases standard of living
income inequality decreases and people dislike inequality
increase in GDP and improved standard of living
increase in technology
resource scarcity
is the idea that things are finite. Because resources aren\'t unlimited, people have to make choices about how to use best use them. Someone allocating their time between eating, exercising, and watching TV is an example of resource scarcity. Here, time is the scarce resource. Note that resource scarcity and opportunity cost are closely related in that opportunity cost is a direct result of resources being scarce. example; Eva finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time.
true
it can be mutually beneficial for two nations to specialize in goods for which they have a comparative advantage and then trade with one another.
winners at unexpected inflation occurs
joy, who has borrowed $40,000 to pay for her college education.
losers
karen a retired school teacher that relies upon her fixed pension to pay for her expenses.
true
long-run economic growth can be measured with per capital GDP
true
long-run economic growth is often a result of increases in productivity
statement say something about how THE WORLD OUGHT TO BE
normative
shoe leather cost
people do not want to hold cash
statement say something that DESCRIBES how the world currently is
positive
contractions
recession deflation, rising, unemployment
Does not increase GDP but increases standard of living
school quality increases from parental involvement.
increase in GDP and improved standard of living
school quality increases from procurement of new equipment.
normative economics
social welfare spending in sweden occupies too large a portion of the national budget.
increases GDP but not the standard of living
the black market shrinks because firms shift to the formal sector but production remains the same
menu cost
the costs of changing prices
marginal decisions
the decisions of what to do with the next ton of pollution, the next hour of free time, and the next dollar of spending money, ect EXAMPLE; An educational software company wants to expand number of economics questions that it offers and is considering hiring another economist. it compares how much adding another worker will improve the product with the additional cost.
peak
the height of an economic expansion, when real GDP stops rising
positive economics
the higher the minimum wage, the higher the price of goods and services is likely to be
business cycle peak
the point at which the economy turns from expansion to recession
long-run economic growth
the process by which rising productivity increases the average standard of living
indexing
the process of making payments dependent upon the overall price level
what is indexing
the process of making payments dependent upon the overall price level
false
the process of specialization and trade has positive net benefits and is therefore beneficial to everyone.
core inflation
the rate of inflation excluding the effects of food and energy prices
normative economics
the richest 1% of americans should pay more taxes than the rest of the 99%
winners at unexpected inflation occurs
the u.s. federal government, which had almost $15 trillion in debt in 2011
self regulating
the view that in an economy problems such as unemployment would be corrected through the working of the invisible hand and that government attempts to improve the economy's performance would be ineffective at best - and would probably make things worse
Does not increase GDP but increases standard of living
volunteers clean a river used for swimming
EX-export
what is sell to other countries
IM-import
what we buy from other countries
example of unit of account cost
whenever the price of any groceries are increased in your normal grocery store, you take time to go to the other store to see if their prices increased too, indicating that the price increase is due to inflation, or whether their prices stayed the same.
Does not increase GDP but increases standard of living
workers work less, but produce same amount