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| 6774505787 | resources into 4 categories | Land: Natural resources: RENT Labor: Human resources: WAGES Capital: Tools, machines, factories: INVESTMENT Entrepreneurship: risk-takers combine land, labor and capital in new ways in order to make profit. | 0 | |
| 6774486206 | Scarcity | People have unlimited wants but materials are scarce | 1 | |
| 6774498950 | Businesses weigh the M.B. against the M.C. of a decision. | Stop when MB=MC | 2 | |
| 6774500670 | Ceteris Paribus | Economists hold factors constant, except for what's being considered. | 3 | |
| 6774528243 | Opportunity Cost | Next best alternative use for a resource. Ex. If the 3 cups of flour are used to bake bread, then the opportunity cost is the cake that could also have been baked with the 3 cups of flour | 4 | |
| 6774539753 | Marginal analysis | used to assist people to maximize the benefit of the output produced. | 5 | |
| 6774553535 | Marginal Benefit (MB) | What you gain when you get one more unit of something. | 6 | |
| 6774556784 | Businesses making a Rational Choice | add units until the MB=MC. | 7 | |
| 6774560546 | PPC | a graph showing all of the possible combinations of output for an economy at full employment producing 2 goods | 8 | |
| 6774570724 | straight-line PPC | Constant opportunity cost = perfectly substitutable inputs (resources) |  | 9 |
| 6774578693 | curved (concave) PPC | Increasing opportunity cost = Imperfect substitutability of inputs (resources). |  | 10 |
| 6774587410 | The Law of Increasing Opportunity Costs | Given our limited resources, as more and more of a product is produced (through reallocation of resources), its opportunity cost goes up. | 11 | |
| 6774613118 | Productive Efficiency | maximum output for technology and resources (A) |  | 12 |
| 6774615320 | Allocative Efficiency | one point on PPC where MB=MC |  | 13 |
| 6774632877 | economy is operating under unemployment | inside its PPC | 14 | |
| 6774635817 | full employment will result in economic growth | Moving from inside of a PPC toward the frontier | 15 | |
| 6774651072 | All will shift the PPC to the right: | increase productivity. increase capital (investment). increase amount resources. increase quality of resources. improvement in technology. | 16 | |
| 6774657670 | Absolute Advantage | lower opportunity cost | 17 | |
| 6774662452 | Comparative Advantage | lower cost | 18 | |
| 6774664180 | specialization | Producing according to comparative advantage and the key to the benefits of trade | 19 | |
| 6774674145 | Comparative Methods (two) | 1) Input Method: Input-Other-Under (IOU) 2) Output Method: Output-Other-Over (OOO) | 20 | |
| 6774689214 | Free Market | forces of supply and demand decide the economic questions and therefore where to allocate resource | 21 | |
| 6774693627 | Command Market | A market where the government or some central authority decides where to allocate resources. | 22 | |
| 6774700514 | Market Systems Characteristics | Private Property Freedom Self-Interest Competition Prices | 23 | |
| 6774708178 | Demand | Consumers' willingness and ability to buy an item at a given price. | 24 | |
| 6774711727 | Law of Demand | The price of an item determines the quantity demanded. | 25 | |
| 6774713501 | The lower the price | the higher the quantity demanded | 26 | |
| 6774715449 | The higher the price | the lower the quantity demanded. | 27 | |
| 6774719545 | price of a good is __________ related to quantity demanded. | inversely | 28 | |
| 6774727397 | Income Effect | When things are expensive, money buys less. When things are cheap, money buys more. | 29 | |
| 6774729066 | Substitution Effect | When apples are expensive and their substitutes (pears) are relatively cheap, I buy fewer apples and more pears. | 30 | |
| 6774733320 | Law of Diminishing Marginal Utility | Each additional unit of an item purchased gives less marginal utility than the previous unit. The only way I will buy more is if the price is lower. | 31 | |
| 6774740253 | Increase in Demand | More quantity demanded at all prices Demand Curve shifts → | 32 | |
| 6774741900 | Decrease in Demand | Less quantity demanded at all prices Demand Curve shifts ← | 33 | |
| 6774745613 | Does price shift Demand? | No | 34 | |
| 6774759899 | Complements V. Substitutes | Complements - goods/services accompanied by Substitutes - goods/services replace other goods/services | 35 | |
| 6774784444 | Supply | Producers willingness and ability to sell a good/service. (not an amount, behavior) | 36 | |
| 6774790109 | Law of Supply | The price of an item determines the quantity supplied. | 37 | |
| 6774792424 | The lower the price | the lower the quantity supplied | 38 | |
| 6774795045 | The higher the price | the higher the quantity supplied | 39 | |
| 6774799734 | price of a good is ______________ related to quantity supplied. | directly | 40 | |
| 6774802794 | The Law of Increasing Marginal Cost | It is more costly to produce two than one. Therefore, I must collect a higher price if I am going to produce more. | 41 | |
| 6774805100 | Increase in Supply | More quantity supplied at all prices Supply Curve shifts → | 42 | |
| 6774807333 | Decrease in Supply | Less quantity supplied at all prices Supply Curve shifts ← | 43 | |
| 6774815612 | Does price shift Supply? | No | 44 | |
| 6774819574 | Changes in Supply N.I.C.E.J.A.G. | Natural/Manmade Phenomenon Input Costs Competition Expectations joint-supply(Cows= milk, beef and hide) alternative goods Government action | 45 | |
| 6774829134 | Equilibrium | When supply = demand | 46 | |
| 6774832568 | Changes in Equilibrium | If demand increases then price increases and quantity increases. If supply increases then price decreases and quantity increases. | 47 | |
| 6774841109 | Increase in Demand Graph | D right : Price increases & Quantity increase |  | 48 |
| 6774843991 | Increase in Supply Graph | S → : Price decrease & Quantity increase |  | 49 |
| 6774863903 | Simultaneous Changes in Supply and Demand | If supply and demand both increase then price is indeterminate, but quantity definitely increases. | 50 | |
| 6774865971 | Decrease in Supply/Increase in Demand Graph |  | 51 | |
| 6774870582 | Disequilibrium | Price occurs at some point where supply and demand are not = | 52 | |
| 6774878115 | Price Floor | a minimum price for a good/service or resource determined outside of the market Ex. Minimum wage | 53 | |
| 6774885253 | Price ceiling | a maximum price for a good/service Ex. Concert tickets sold by Ticket-master | 54 | |
| 6774892642 | Markets work best when supply and demand | determine the price of goods/services or resources. | 55 | |
| 6774898476 | When forces other than supply/ demand determine the price of goods | surpluses and shortages result | 56 | |
| 6774907193 | forces of supply and demand that cause artificial prices | Black markets, ticket scalping, undocumented workers | 57 | |
| 6774912548 | Consumer Surplus | the difference between what consumers would willingly pay and the equilibrium price | 58 | |
| 6774917528 | Producer Surplus | difference between what producers would willingly charge and the equilibrium price. | 59 | |
| 6774929408 | Circular Flow Model |  | 60 | |
| 6774933134 | Injections | Investments and purchases of exports. | 61 | |
| 6774934454 | Leakages | Savings and purchases of imports. | 62 | |
| 6774940561 | GDP | market value of all final goods and services produced within a nation in a year. | 63 | |
| 6774945135 | Not counted in GDP | Used intermediate goods Non-market production (stay at home Dad) Underground or 'black market' | 64 | |
| 6774952393 | Aggregate Spending | GDP = C + IG + G + XN C = Consumption IG = Gross Private Investment G = Government Spending XN= Net Exports = Exports (X) - Imports (M) | 65 | |
| 6774961165 | What is the largest component of U.S. GDP. | Consumer spending | 66 | |
| 6774963003 | Gross Private Investment | Spending in order to increase future output or productivity Ex: Business spending on capital, New construction | 67 | |
| 6774972161 | Does government spending on final goods and services and infrastructure count toward GDP? | Yes | 68 | |
| 6774974563 | Do government transfer payments count toward GDP? | No | 69 | |
| 6774981478 | Imports | create a flow of money away from the U.S. in exchange for foreign production | 70 | |
| 6774983067 | Exports | create a flow of money to the US in exchange for domestic production | 71 | |
| 6774987625 | Nominal GDP | current GDP measured at current market prices. (doesn't include inflation) Nominal GDP may overstate production because inflation. | 72 | |
| 6774992032 | Real GDP | current GDP measured with a fixed dollar. Real GDP holds the value of the dollar constant makes year to year comparisons. | 73 | |
| 6774996844 | Is the GDP Constant in the US? | No | 74 | |
| 6775002538 | Business Cycle Diagram | ups and downs in GDP over time |  | 75 |
| 6775012025 | GDP Deflator | A measure of the cost of living (Nominal GDP/RGDP)*100. | 76 | |
| 6775018306 | Consumer price index | reflects the prices of all goods and services bought by consumers (includes imports). | 77 | |
| 6775294540 | Consumer Price Index compares | the price of a fixed basket of goods and services to the price of the basket in the base year | 78 | |
| 6775299456 | GDP deflator measures | the difference between real GDP and nominal GDP | 79 | |
| 6775308530 | Bureau of Labor Statistics | reports the CPI each month. | 80 | |
| 6775310463 | CPI monitors | changes in the cost of living over time. | 81 | |
| 6775322893 | Consumer Inflation Rate | (CPI New- CPI Old)/CPI Old *100 | 82 | |
| 6775328755 | Inflation Rate | (Cost of market basket- Cost of market basket base year)*100 | 83 | |
| 6775336088 | Inflation Rate symbol | π | 84 | |
| 6775337608 | Percent change of CPI | (CPI Last Year- CPI This Year)CPI Last Year*100 | 85 | |
| 6775353149 | Unexpected Inflation winners | Borrowers, variable-income, & Employers | 86 | |
| 6775358046 | Unexpected Inflation Losers | Savers, Fixed income, & Employees | 87 | |
| 6775365312 | Labor Force | Number of people in a country that are classified as either employed or unemployed | 88 | |
| 6775369315 | Labor Force Participation Rate | % of working age population in the labor force. | 89 | |
| 6775372661 | Frictional | "between jobs", voluntary, good for individuals and society. | 90 | |
| 6775372662 | Structural | lack of skills or declining industry ex. H.S dropouts | 91 | |
| 6775374449 | Cyclical | downturns in business cycle. Bad for society and individuals. | 92 | |
| 6775376879 | Seasonal | ex: Mall Santas & Life-guards | 93 | |
| 6775379926 | Full Employment | Occurs when there is no cyclical unemployment present in the economy. | 94 | |
| 6775388378 | Natural Rate of Unemployment (NRU). | level of unemployment full potential. US 4%-5 | 95 | |
| 6775395230 | Okun's Law | Every 1% increase in the u% causes a 2% decline in Real GDP | 96 | |
| 6775402324 | Disposable Income (DI) | DI = Gross Income - Taxes | 97 | |
| 6775405744 | Consumption | The ability to consume is constrained by: disposable income & propensity to save. | 98 | |
| 6775412083 | Marginal Propensity to Consume equation | ΔC/ΔDI | 99 | |
| 6775413755 | Marginal Propensity to Save equation | ΔS/ΔDI | 100 | |
| 6775417623 | Investment in GDP | New plants (factories) Capital equipment (machinery) Technology (hardware & software) New Homes Inventories (goods sold by producers) | 101 | |
| 6775422397 | investment decisions | Cost / Benefit Analysis. | 102 | |
| 6775427506 | Investment Demand Curve |  | 103 | |
| 6775431700 | Shifts in Investment Demand | Cost of Production: Lower costs shift ID → Business Taxes: Lower business taxes shift ID → Technological Change:New technology shifts ID → Stock of Capital :low on capital, then ID → Positive expectations shift ID → | 104 | |
| 6775442121 | Loanable Funds Market | effects: savers and borrowers shows: exchange funds at the real rate of interest | 105 | |
| 6775445508 | demand for loanable funds, or borrowing comes from | households, firms, government, & foreign sector. | 106 | |
| 6775451640 | Loanable Funds Market in Equilibrium |  | 107 | |
| 6775455428 | Changes in the Demand for Loanable Funds | More borrowing = more demand for L.F. (→) Less borrowing = less demand for L.F. (←) | 108 | |
| 6775466734 | Loanable funds market determines the | real interest rate | 109 | |
| 6776187850 | Multiplier Equation | 1/1-MPC 1/MPS (Change in GDP/ Change in Spending) (1/RR) | 110 | |
| 6776195291 | Multipliers are _____when there is an increase in spending and____ when there is a decrease | (+) , (-) | 111 | |
| 6776248020 | Real-Balances Effect | P.L. is high households and businesses can't afford as much output. | 112 | |
| 6776250680 | Interest-Rate Effect | A higher P.L. increases the interest rate which discourages investment. | 113 | |
| 6776260049 | Foreign Purchases Effect | A higher P.L. increases demand for cheaper goods | 114 | |
| 6776273186 | Determinants of AD | Consumption (C) Gross Private Investment (IG) Government Spending (G) Net Exports (XN) = Exports - Imports (X - M) Increase Right Decrease Left | 115 | |
| 6776286356 | Household spending and how it affects AD | More wealth = more spending (AD shifts →) + expectations = more spending (AD shifts →) Less debt = more spending (AD shifts →) Less taxes = more spending (AD shifts →) | 116 | |
| 6776324562 | Determinants of Gross Private Investment | Higher Expected Returns = More Investment (AD→) | 117 | |
| 6776350723 | Government Spending | More Government Spending (AD→) Less Government Spending (AD←) | 118 | |
| 6776354316 | Net Exports are sensitive to: | Strong $ (appreciation)= More Imports and Fewer Exports = (AD ←) Strong Foreign Econ = More Exports = (AD →) | 119 | |
| 6776359439 | Aggregate Supply | level of RGDP that firms will produce at each PL | 120 | |
| 6776361856 | Long-Run | input prices are completely flexible and adjust to changes in the PL in the L.R. RGDP is independent of the PL. | 121 | |
| 6776367855 | Short-Run | input prices are sticky and do not change the P.L. S.R. directly related to the PL. | 122 | |
| 6776382595 | What graph shows full employment in the economy | Long Run Aggregate Supply | 123 | |
| 6776391479 | input prices are completely flexible in the | LRAS Vertical | 124 | |
| 6776396511 | input prices are sticky in | the short-run, the SRAS is upward sloping. | 125 | |
| 6776403067 | Determinants of SRAS | Input Prices Productivity Legal-Institutional Environment Tax Policy Deregulation | 126 | |
| 6776415008 | Input Prices change SRAS | Increases in Resource Prices = SRAS ← | 127 | |
| 6776426560 | Productivity change SRAS | More productivity = lower unit production cost = SRAS → | 128 | |
| 6776435297 | Taxes and Subsidies | Taxes ($ to govt) on business increase per unit production cost = SRAS ← Subsidies ($ from govt) to business reduce per unit production cost = SRAS → | 129 | |
| 6776439339 | Government Regulation | Government regulation creates a cost of compliance = SRAS ← Deregulation reduces compliance costs = SRAS → | 130 | |
| 6776449472 | Long-Run Phillips Curve Shifts | LRPC: natural rate of unemployment Increases in un will shift LRPC → Decreases in un will shift LRPC ← | 131 | |
| 6807418503 | Crowding Out | increased IR lead to a reduction in private investment spending dampens the initial increase of total investment spending | 132 | |
| 6807498605 | Deflated nominal GDP | Nominal/GDP Deflator | 133 | |
| 6807505316 | Economy operating beyond full employment causes | increase in AD won't lower UN rate will cause inflation | 134 | |
| 6807519941 | An economy-wide NEGATIVE supply shock will: | shift the aggregate supply curve leftward decrease output increase price level. | 135 | |
| 6807538097 | Supply side incentives | "Reaganomics" greater tax cuts for investors and entrepreneurs provide incentives to save and invest, and produce economic benefits that trickle down into the overall economy | 136 | |
| 6807554751 | Contractionary monetary policy causes | Nominal IR: Up AD: Down Output: Down PL: Down | 137 | |
| 6807565754 | Fiscal | public revenues (taxation) and public spending, debt, and finance (govt. spending). | 138 | |
| 6807613399 | Higher tariff imposed on foreign goods | Tariff causes imports to fall= net exports raise Net exports will raise and $ appreciates | 139 | |
| 6807677073 | Growth | increase in quantity of resources & tech. advances | 140 | |
| 6807706225 | Closed economy | no imports or exports | 141 | |
| 6807738147 | Aggregate | adding up all micro activity of household and firms into macro | 142 | |
| 6807753871 | RGDP Equation | (Nominal/Price Index)X100 | 143 | |
| 6807768551 | CPI | Consumer Price Index: average price level of items that consumers buy | 144 | |
| 6807778956 | Unemployment rate | (unemployed/ Labor force) X100 | 145 | |
| 6807782535 | Discouraged workers | not counted in UN ex: moved back with parents | 146 | |
| 6807799768 | MPC & MPS Equations | (change in consumption/Change in disposal income) (change in Saving/Change in disposal income) MPC+MPS=1 | 147 | |
| 6807803641 | Quantity demanded increases when price _____ | Falls | 148 | |
| 6807826863 | Market for Loanable Funds Graph | Supply: Saving/Lending Demand: Investment/ Borrowing Equilibrium: $ saved= $ invested |  | 149 |
| 6807845062 | Common Multipliers | (1/.10)= 10 (1/.20)=5 (1/.25)=4 (1/.5)=2 | 150 | |
| 6807877959 | Decrease in taxes (Increases/ Decreases) DI? | Increases | 151 | |
| 6807920719 | LRAS Shifts | Availability of Resources Tech. & Productivity Incentives | 152 | |
| 6807987326 | Shocks Determinants | increase in AD and SRAS Causes Increase in RGDP= reduces UN and Increases PL | 153 | |
| 6808045429 | supply side boom | AD Constant SRAS shifts Right PL Falls RGDP increases UN Falls | 154 | |
| 6808062469 | Stagflation | Inflation and UN increasing causes SRAS to falls & AD constant | 155 | |
| 6808076873 | Phillips curve | Relationship Btween Inflation and UN | 156 | |
| 6808088790 | Expansionary Fiscal | economy is in a recession RGDP Low & UN high Govt: Increases Spending/ Lowers Taxes (AD right) Crowding out (New money can cause inflation) | 157 | |
| 6808099851 | Contractionary Fiscal | Beyond Full Employment/Inflation Govt: Raises Taxes (AD left) | 158 | |
| 6808160436 | Net export effect | Increased demand for $ appreciates $ | 159 | |
| 6808204527 | Sticky Prices | Don't change | 160 | |
| 6808210468 | Equity Financing | Relinquishes part of control of company/firm ex: stocks | 161 | |
| 6808219924 | Debt Financing | raises money by borrowing ex: bonds | 162 | |
| 6808225457 | Fiat money | Paper and coin | 163 | |
| 6808229037 | Unit of Account | Currency | 164 | |
| 6808231739 | Store of value | essentially same value | 165 | |
| 6808240272 | M1 | Cash, Coins, Checking deposits, Travlers Checks, (most liquid) | 166 | |
| 6808255673 | M2 | M1, small deposits (less liquid penalty for withdrawal) | 167 | |
| 6808272517 | M3 | Large time deposits (not easily liquidated) | 168 | |
| 6808277347 | Money demand/supply graph |  | 169 | |
| 6808306772 | Keynesian | PL is sticky IR balance supply and demand which determines AD and SRAS | 170 | |
| 6808312453 | Classical | PL is flexible and LRAS adjusts natural rate of employment | 171 | |
| 6808325238 | Reserve Ratio equation | Cash Reserves/Total deposits | 172 | |
| 6808404030 | T-account | assets: R.R., Excess Reserves, total assets liabilities: checking deposits, total liabilities | 173 | |
| 6808441150 | Monetary | Federal Reserve: open markert operations, discount rate, reserve ratio (circulation of money) | 174 | |
| 6808458774 | expansionary monetary | fix recession: increase AD lower unemployment, increase RGDP | 175 | |
| 6808466046 | contractionary monetary | lower PL, decreases RGDP, back to full employment IR increases | 176 | |
| 6808485892 | open markert operations | Sell bonds = smaller money supply Buy bonds = bigger money supply | 177 | |
| 6808525598 | Changing Discount Rate | Borrowing from Fed. = interest rate Lowering DR= Increases excess reserves= expands money supply | 178 | |
| 6808541933 | Lowering Reserve Ratio= | increase in excess reserves = expands money supply | 179 | |
| 6808554852 | High UN | buy bonds Lower D.R. Lower R.R. Money supply, investment, AD, & RGDP would increase Inflation & UN would decrease | 180 | |
| 6808559657 | High Inflation | sell bonds raise D.R. raise R.R. Money supply, investment, AD,investment, & RGDP would decrease Inflation would increase | 181 | |
| 6808645171 | Quantity Theory of Money | Quantity of money= PL and Growth rate= Inflation | 182 | |
| 6808672702 | Balance of payment accounts | exchanging goods and services with foreign consumers payments sent back and forth: balance of flow between F and D | 183 | |
| 6808691633 | Current Account | indicator of economy's health = the balance of trade net income from foreign countries | 184 | |
| 6808721529 | Capital Account | nation buys foreign firm or real estate = outflow of assets to foreign nations | 185 | |
| 6808731621 | official reserves | Federal reserve holds quantities of foreign currency | 186 | |
| 6808745859 | Currency Market | shows exchange rate ex: 1 euro = $2 US | 187 | |
| 6808789095 | Appreciating V. Depreciating | A: price of currency rising: less dollars needed to buy euro D: price of currency falling: more dollars needed to buy euro | 188 | |
| 6808822515 | Tariffs | revenue tariff: tax levied on foreign good protective tariff: protects domestic industry | 189 | |
| 6808836007 | Quotas | maximum amount a good can be imported into domestic market | 190 | |
| 6810530601 | Money market determines the | nominal interest rate | 191 |
