Macro Unit 5 and 6

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depreciation

A decrease or loss in value -buying more stuff imports decrease and exports increase because they are cheap to other countries

expansionary monetary and fiscal

Increase: -Ad -PL -real GDP Decrease: -unemployment Indeterminate: -interest rates -gross investment -economic growth

contractionary monetary and expansionary fiscal

Increase: -interest rates Decrease: -gross investment -economic growth Indeterminate: -AD -PL -real GDP -unemployment

demand elasticity

% change in quantity demanded / % change in price price elasticity > 1 = elastic price elasticity < 1 = inelastic

economic growth

-better resources quantity ( land, labor, capital ) -better resources quality ( productivity )

counts in gdp

-final goods / services -capital goods -new construction of structures -inventories

does not count in gdp

-intermediate goods -inputs -used goods -financial assets -foreign made products

appreciation

An increase in the value of a currency -demand increase -exports decrease because they are expensive to other countries, imports increase

M2

M1 plus savings accounts, certificates of deposit, and other liquid assets

fixed exchange rate

The government activity manages the country's currency

budget deficit

a situation in which the government spends more than it takes in

budget surplus

a situation in which the government takes in more than it spends

current account

account that tracks trade deficits

national debt

accumulation of all previous deficits and surpluses

physical capital

all human-made goods that are used to produce other goods and services; tools and buildings

floating exchange rate

market determines rate

M1

currency, demand deposits, traveler's checks, and other checkable deposits

ERIPT

current account: -exports -receipts from overseas assets -imports -payment income -transfers (net)

implicit liabilities

debts that have not occurred yet

surplus

exports more than imports

FRUR

financial capital: -foreign owned us assets -reserves foreign -us assets abroad -reserves us

deficit

imports more than exports

supply elasticity

small quantity change = inelastic big quantity change = elastic

deficit

taxes < spending

surplus

taxes > spending

human capital

the skills and knowledge gained by a worker through education and experience

financial capital account

tracks changes in assets

current

tracks exports ( inflow )

capital

tracks foreign owned us assets ( inflow )

capital

tracks foreign reserves ( inflow )

current

tracks imports ( outflow )

current

tracks income payments ( inflow )

current

tracks net transfers ( inflow )

current

tracks receipts from overseas assets ( inflow )

capital

tracks us assets abroad ( outflow )

capital

tracks us reserves ( outflow )

ADAS

what graph does the Phillips curve MIRROR

increases

what happens to inflation if the government spends money

high

you want to buy assets when interest rates are...


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