econ extra
M1 doesn't include savings accounts because
it only includes mediums of exchange
a barter economy involves
higher costs for each transaction
if you want to reduce demand pull inflation, the cost is
higher unemployment
increasing government budget deficit also increases
real interest rates
if wages increase more than productivity what happens to the supply curve
shift left increasing price level
the unemployment rate understates the actually level because it lacks
underemployed and discouraged workers
a command economy uses what
a more centralized planning in economic decision making
a countries standard of living improvement involves an increase in what
a real per capita GDP
what does definitely mean in a question
both curves can shift
hyperinflation is typically caused by
continuous expansion of the money supply to finance government budget deficits
what happens to bond prices and interest rates if banks increase money supply by buying bonds
increase in bond prices, decrease interest rates
increased inflation and unemployment could be explained by an
increase in inflationary expectations
a supply shock causes what for the price level and wage
increase in price level decrease in REAL wage
a decrease in money supply will lead to a decrease in
inflationary expectations
what happens when the US dollar depreciates
money value decreases so exports are cheaper increasing the amount of exports and decreasing the amount of imports
an increase in _______ will not likely increase labor productivity
size of labor force
in a flexible exchange rate system appreciating the value of one currency relative to the other happens when
the appreciating country's real interest rates increase relative to the other country's
what do households do in the circular flow diagram
they are suppliers of resources and consumers of goods and services
what do tax rates, changes in gov spending, and changing money supply have in common
they have different lag times and they all affect aggregate demand