Macro

Fiscal policy

a government adjusts its spending levels and tax rates to monitor and influence a nation's economy

According to the law of demand there is ________ relationship between price and quantity demanded.

a negative

MPS equation

change/total

When the interest rate rises, bond values

fall

store of value

function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved

Convergence theory suggests that gaps in ________ tend to close over time.

national income

Positive Economics

objective and fact based

The value of what KFC produces in Japan is included in the U.S. ________ and in the Japanese ________

GNP; GDP

Macroeconomic policies became more influenced by Keynes' theories starting with,

Great depression

ceteris paribus

all other things remaining constant

According to the theory of comparative advantage, specialization and free trade will benefit

all trading parties, even when some are absolutely more efficient producers than others.

Normative economics is an approach to economics that

analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred courses of action.

A decrease in the wage rate of pizza makers will cause a

decrease in price

luxury good

demand increases more than proportionally as income rises

normal goods

demand increases when income increases

If the market price of coffee is $3.00 per pound but the government will not allow coffee growers to charge more than $2.00 per pound of coffee, which of the following will happen?

There will be a shortage of coffee

Monetary policy

a central bank influences a nation's money supply

The speculative demand for money is

negatively related to interest rate.

The GDP deflator is the

nominal GDP divided by real GDP multiplied by 100

unit of account

nominal monetary unit of measure or currency used to represent the real value (or cost) of any economic item;

Production inefficiency occurs

only when an economy produces underneath its production possibility frontier

The transactions demand for money is

positively related to aggregate income

oppurtunity cost is based on principle of __________

scarcity

The concept of trade-offs would become irrelevant if

scarcity were eliminated

People scalping tickets for the Super Bowl will be successful at selling the tickets for a profit

when the price set by the National Football League is less than the market equilibrium price

An example of an ineffective price ceiling would be the government setting the price of wheat at ________ per bushel when the market price is at $5.00 per bushel.

$6.00

When Hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris paribus,

the supply of sugar decreased, and the price of sugar increased.

gross national product

the total value of goods produced and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments.

gross domestic product

the total value of goods produced and services provided in a country during one year

: GDP equation

C+I+G+X-IM

Price index in a given year =

Cost of market basket in a given year divided by Cost of market basket in base year ∗ 100

Normative Economics

Statements and opinions