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