econ module 4-7
what is a real expenditure formula
consumption + gross investment + government purchases + net exports =
what is the growth rate formula
(NEW GPD-OLD GDP)/OLD GDP*100
year 1 real GDP:1.00 population:50 real gdp per capita ? year 2 real gdp 1.04 population51 real gdp per capita ?
1 trillion. population is 50 million. real gdp per capita = 1,00,000,000,000/50,000,000 CANCEL out the zeros + 10,000/5= 20,000 per capita
Suppose that in year 1, real GDP per capita was $25,000 billion and in year 2, real GDP per capita rose to $28,000 billion. The growth rate of real GDP per capita was %. (Enter just the number; % sign has been provided for you.)
12
Suppose that real GDP per capita equals $25,000 and that the growth rate of real GDP per capita is 6 percent per year. It will take years for real GDP per capita to double to $50,000.
12
Suppose that in year 1, real GDP per capita was $30,000 billion and in year 2, real GDP per capita rose to $34,500 billion. The growth rate of real GDP per capita was %. (Enter just the number; % sign has been provided for you.)
15
Suppose that in year 1, real GDP was $60 billion and in year 2, real GDP rose to $69 billion. The growth rate of real GDP was 23Blank 1Blank 1 23 , Incorrect Unavailable%. (Enter just the number; % sign has been provided for you.)
15
when did economies started to grow faster than ever before
1600
Suppose that real GDP per capita equals $25,000 and that the growth rate of real GDP per capita is 4 percent per year. According to the rule of 72, it will take years for real GDP per capita to double to $50,000.
18
Suppose that real GDP per capita equals $25,000 and that the growth rate of real GDP per capita is 3 percent per year. It will take years for real GDP per capita to double to $50,000.
24
The time it takes for something to double is approximately equal to divided by the growth rate.
72
Suppose the real GDP of a country was $50 billion in Year 1. In year 2, the real GDP rose to $54 billion. The growth rate of real GDP was %. (Enter a number in the blank.)
8
BASIC PERCENTAGE CHANGE FORMULA
PC=New-old/old *100
what is unemployment rate?
THE PERCENTAGE OF WORKERS N THE LABOR FORCE WHO ARE UNEMPLOYED, A GOOD INDICATOR OF THE ECONOMY'S OVERALL HEALTH
what is positive shock to aggregate supply
a change to one of teh determinants of aggregate supply that causes an increase in the aggregate quantity of real gdp supplied at every price level . graphically a positive shock s represented y a rightward shift oof the aggregate supply curve
what is the negative shock to aggregate demand
a change to one of the determents of aggregate demand that causes a decrease in the aggregate quantity of real GDP demanded at every price level. graphically a negative shock is represented by a leftward shift of the aggregate demand curve
what is the negative shock to aggregate supply
a change to one of the determinants of aggregate supply that causes a decrease in the aggregate quantity of real Gdp supplied at every price level. graphically a negative shock is represented by a leftward shift of the aggregate supply curve
what is the positive shock to aggregate demand
a change to one of the determinates of aggregate demand that causes an increase in the aggregate quantity of real GDP demanded at every price level. represented by a rightward shift of the aggregate demand curve
what is the decrease in aggregate supply
a decrease in the quantity of real gdp supplied in the economy at every price level
what is depreciation?
a decrease in the value or price of one currency relative to another
if a country produces a lot of capital it will experiences
a lot of economic growth shifting the production possibility curve outward
what is the long run equilibrium
a market condition in which firms don't face incentives to enter or exit the market and firms earn a noraml profit
using the production possibility curve economic growth resulting from the previously idle resources is shown as
a movement toward the curve
what is an example of new technology that can increase productivity is
a new and improved machine to pick coffee beans
what is that is a stabilizing policy
a policy or set of policies enacted by a government to minimize business cycle fluctuations and avoid excessive unemployment or inflation
what are the law of increasing opportunity costs
a principle in economics that holds that because some resources are better suited to producing one good or service than another as the production of a good or service increase the opportunity cost of each additional unit
what happens when there is a reduction of aggerate demand
a reduction in business and personal tax rates
what is the rule of 72
a rule of thumb used to estimate given a constant rate of growth how long it will take for a value to double in size ,where the time to double is calculated as 72 divided by the growth rae. generally the time to double and the growth rate are expressed in annual terms
what is aggregate demand
a schedule or curve that represents the relationships between the quantity of real GDP demanded in the economy and the price level all else is held constant
what is aggregate supply (short run )
a schedule or curve that represents the relationships between the quantity of the real gdp supplied din the economy ant he price level
what is short run equilibrium
a short run situation in which the aggregate quantity of real gdp demanded is equal to the aggregate quantity of real GDP supplied . o n a graph short run equilibrium occurs where the aggregate demand and aggregate supply curves intersect
what is sticky wages
a situation where wages do not adjust in the short run . if wages are sticky downward , workers are reluctant to accept a decrease in their wages , creating a flat labor supply curve at the current wage
what is sticky wages
a situation where wages do not adjust in the short run. if wages are sticky downward, workers are reluctant to accept a decrease in their wages , creating a flat labor supply curve at the current wage
the average income in the us is
about 4 times greater than theworld average
The idea that people slowly incorporate new information into the decisions they make is known as
adaptive expectations
what is the relationship between the prices level and the amount of real GDP supplied in the economy
aggregate supply and short run aggregate supply
what is consumption ?
all expenditures made by households on goods and service like food clothing electronics and recreation during a given period of time
what is the self correction view
an economic school of though in which the best policy response to macroeconomic instability is to let the economy return to equilibrium , or self correct without interference
what is the monetarist view
an economic school of though that emphasizes the importance of the money supply and therefore monetary policy in determining the level of output in ana economy
what is the mainstream view
an economic school of though that emphasizes volatility in investment spending as the primary cause of changes in aggregate demand and therefore the level of output in the economy
what is the real business cycle theory
an economic school of through that emphasizes the importance of technological innovation and resource availability in determining aggregate supply and therefore the level of output in an economy
what is economic growth
an increase in real gross domestic product or real gross domestic product per capita
what might lead to the expansion of business
an increase in short run aggregate supply
what is an increase in aggregate supply
an increase in the quantity of real gdp supplied in the economy at every price level
using a production possibility curve economic growth resulting from addition resources is shown as
an outward shift of the curve
how is standard of living determined
anything that affects an individuals well being such as material and non material wealth socioeconomic status access to healthcare and work environment
what is the relationship between aggregate expenditures and aggerate demand
as the price level rises , aggregate expenditures shifts down and there is movement up and along the aggregate demand
decrease in business taxes shows an
business cycle expansion
what are the three categories of gross investment
business fixed, residential ,inventory
Since 1978, has been able to sustain average growth rates of roughly 9 percent. (Name the country.)
china
an blank in aggregate demand may lead to a recession.
decrease
when inflation occurs when the total spending is greater than the economy's ability to produce output at the existing price level is due to
demand pull inflation
what happens when the purchasing power of the us falls relative to other currencies
depreciation
with the fixed amount of capital and technology adding additional workers to the economy is likely to result in blank marginal returns
diminishing
The time it takes for something to growBlank 1Blank 1 grow , Incorrect Unavailable is approximately equal to 72 divided by the growth rate. (Remember enter only one word in the blank.)
double
Given a constant rate of growth, the rule of 72 is a quick and easy way to estimate how long it will take for a number or amount to:
double in size
what are capital goods
durable goods that are used to produce other goods and services
an increase in real GDP or GDP per capita is called
economic growth
what is a new keychain
economic models that assume monopolistically competitive markets and sticky prices and wages, which makes the economy take longer to reach a new equilibrium when it is subjected to a shock
what is the new classical
economic models that assume perfectly competitive markets and rapid adjustment to a new economic equilibrium when a market is subjected to a shock
what is the assumption based of the economy's long run AS curve that assumes that wages and other resources prices ......
eventually rise and fall to match the upward and downward changes in the price level
what is a challenging aspect of using government expenditures to stimulate the economy is that
eventually spending must return to their previous level which may adversely affect aggregate demand in the economy
is it true or false the production possibilities frontier model is a realistic model of economic growth in the real world
false
what are the three reasons that aggerate demanded is downward sloping
foreign purchasing ,interest rate, and real balance effect
what is consumption goods or services
goods or services that are obtained by a household to directly satisfy the needs or wants of the members of the house hold but have no capsity to increase productivity capacity
the real gdp growing at 4 percent is considered to be an
high growth rate for an industrialized country and suggests robust economic growth
eal GDP growing at 4 percent is considered to be a(n):
high growth rate for an industrialized country and suggests robust economic growth.
In the 10 years after NAFTA's enactment, from 1994 to 2004, growth in the United States was than in the decade preceding it.
higher
what happens when the dollar value depreciates and foreign goods and services become more expensive to U.S consumers and BLANK falls
imports
what happens to the purchasing power of income when the prices decrease
it increases and consumers are able to purchase more goods and services or resources
what happens to inflation and employment when there is a decrease in aggregate demand
inflation lowers and there is a decrease in unemployment
which of the following is true of the formula ( new real gdp-old real gdp)/old real gdp * 100%
it gives the economic growth rat
what happens in the short run with the aggregate supply curve
it slopes upward
if an economy moves up along the short run Philips curve the unemployment rate
it will decrease and inflation rate will increase
what is the label for the axes of the aggregate demand graph should be?
it would be the real domestic output on the horizon
the real gdp per capita in china is
lower than in the us but chinas growth rate is making it possible for the chinese to catch up to the us
te more capital a country has the blank productive it will be
more
what is the next export formula
net exports = exports - imports
New Classical economics is a model that assumes markets are
perfectly competitive and there are rapid adjustments to new economic equilibrium.
the points on the blanks possible frontier show how we are allocating our resources to the production of two different goods or services
production
a graph that shows the possible combination of two different goods or services that can be produced with fixed resources and technology
profit possibilities frontier
real gdp per capita
real gdp per capita= real gdp/population
what happens when there is a decrease in aggregate demand
represented by a leftward shift of the aggregate demand curve . a decrease in the quantity of a real gdp demanded in the economy at every price level
what happens when there is an increase in aggregate demand
represented by a rightward shift of demand curve. an increase in the quantity in the real gdp demanded in the economy at every price level
out of the options what would mostly shift the aggregate supply curve? a change in the prices of ? domestic products foreign products financial assets resources
resources
the points on the production possibilities frontier show how we are allocating our
resources
As nominal wages and the costs of other resources fall during a recession, aggregate supply shifts to the
right
starting in the late 1600s as economics start to grow
standards of living began to grow
what is generally the cause for social institutions that inhibit production when there is a decrease aggregate BLANK
supply
when the aggregate blank curve slopes upward because the input prices are sticky .what is blank
supply
suppose that the price of oil falls worldwide . this will cause an aggregate
supply to increase shifting the aggregate supply curve to the right
The economic models that assume markets are perfectly competitive and there are rapid adjustments to new economic equilibrium is known as
the New Classical Model.
The economic models that assume markets are monopolistically competitive and adjustments to equilibrium take time due to sticky wages and prices is known as
the New Keynesian Model.
what is the quantity of real gdp demanded
the aggregate quantity of output (real Gdp) demanded at a given price level . sometimes referred to simply as output .
As nominal wages and the costs of other resources fall during a recession
the aggregate supply curve shifts to the right real output grows and the price level falls further.
what is inflation
the aggregate supply curve shifts to the right real output grows and the price level falls further.
what is stagflation ?
the aggregate supply curve shifts to the right real output grows and the price level falls further.
what is gross investment
the dollar value of all new capital purchases and the expansion of inventories in an economy during a given time period . there are three categories of investment: business fixed and residential and inventory
what is the Phillips curve?
the downward sloping line that represents the negative or inverse relationship between the relate of inflation and the unemployment rate in the short run
what does the intersection of the aggregate demand and aggerate supply curves determine?
the equilibrium level of real domestic output and prices
what does the relationships between the aggerate demand curves and the aggregate expenditures model is derived from
the facts that the decrease in the price level shifts eh aggerate expenditures schedule downward and decreases equilibrium GDP
how does economic describe social institutions?
the formal and informal rules of the game that society creates to provide structure to political economic and social interactions
what is marginal propensity to consume
the fraction of each additional dollar of income that is spent on consumption. marginal propensity to consume=change in consumption/change in income
what are rational expectations
the idea that people asses all the information available to them immediately update their expectations and change their behaviors as needed
what is static expectations
the idea that people do not incorporate new information into their experiences and do not adjust to new information, leading to behaviors that are static
what is money illusion
the idea that people focus only on the nominal value of their wealth not he real value
what is sticky resource prices
the idea that resource prices the to adjust slowly ( be sticky0 in response to changes in the market
what is the appreciation of currency
the increase in the value or price of one currency relative to another
what does the aggerate demand curve show ?
the inverse relationship between the price level and the quantity of real Gdp
what is standard of living
the level of overall wellbeig enjoyed by an individual group or society.
What is full employment real gdp
the level or real gdp produced in an economy when it is operating at eh natural rate of unemployment . the level r real gdp when the economy is in a long run equilibrium
what is the determination of the long run equilibrium occurring where the AD and SARS curves intersect ?
the long run aggregate supply curve
what does the aggregate demand show?
the negative relationship between the price level and the quantity of real gdp
what is diminishing marginal utility
the negative relationship between the quantity of a good service or resources and marginal utility obtained from each additional consumption in a given period of time
what can aggregate demand be presented as??
the overall total demand for real gdp
What is the inflation rate
the percentage increase in the overall price of goods and services in the economy from one time period to another
what are flexible prices
the practice of pricing a product or service by negotiating between buyer and sellers
out of the options what can decrease aggregate supply ? technology education of workers the price of oil health of workers
the price of oil
what is the resource price
the price paid for or opportunity cost of using a resource such as land labor capital or entrepreneurial ability
what is the exchange rate
the rate or price at which one currency can be exchanged for another
how would use describe long run aggregate supply
the relationship between the real gdp and the price level when all input prices are flexible. REPRESENED BY A VERTICLE LINE
what is the business cycle
the short term fluctuations experienced in the economy due to changes in levels of economic activity
what is the significant about the short run
the time period in which a least one input of production is fixed but other inputs can be changed
what is capital
the tools machinery infrastructure and knowledge used to produced goods and services . there is human and physical capital
in the aggregate demand and supply model, what happens to the price level
the vertical axis of the graph and real gdp is on the horizontal axis
what is a key assumption that underlines the short run aggregate supply curve
the wages are sticky in the short run and do not immediately adjust o changes in economic activity
What happens when there is a decrease in government spending?
there is a decrease in aggregate demand
what happens when there is a price level increasing causing movement along the aggregate demand curve
there is a decrease in net exports
what happens during the substitution effect when there is an increase in the price pf one good?
there would be an increase in demand for its substitutes
what is the real balance effect
this is one of the three reasons that aggerate demand is downward sloping: when the price level rises the real value of saving falls and people are less willing or able to buy goods and services thus reducing the aggregate demand quaintly of real gdp aggerate demanded
what is growth rate
this is rate of change of a variable over a specified period of time ,usually expressed as a percentage of change
what is the substitution effect
this is the change in the price of one good or service or resource has on the demand for another
what is adaptive expectations
this is the idea that people slowly incorporate new information into the decisions they make adapting to the changes they observe in the economy
what is significant about long run
this is the time period in which all inputs of production can be changed
what is the income effect
this is when there is a change in the price of a good , service or resource has on the purchasing power of income.
what does sticky mean
this means slow adjustment
what is the interest rate effect
this one of the three reasons that aggerate demand is downward sloping. when the price level rises , the demand for money increases which causes interest rates to rise , resulting in a decrease in investment and consumption spending ,thus reducing the aggregate quantity of real gdp demanded
what is productivity
this the total amount of output produced with a given level of inputs
Rate of 72
time to double (in yes) = 72/growth rate
what is demand used for ?
to describe the price and quantity of a single good or service produced in a specific market
why do economist use aggregate demand
to talk about price and quantity of a single good or service produced in a specific market and to describe the overall or total demand for all final goods and service produced in an economy
When it comes to growth rates, small changes can have big impacts and steady growth over time can change the world.
true
if inflation is high then
unemployment is low
what is animal spirits
unpredictable human emotions that can lead to panics or market crashes
what direction does the aggregate supply curve slope toward?
upward
what is the upward slope of the short run aggerate supply curve is based on the assumption that ?
wages and other resources prices do not respond to price level changes
what is macroeconomics relation to the great depression
was born during the great depression grew from a need to understand the entire economy and to provide guidance on how to manage it
what is staglfation
when an economy experiences both rising unemployment (a stagnating economy) and rising prices (inflation)
underutilized resources such as unemployed workers or idle capital will make an economy operate blank it production possibility frontier
within
