| 6765589888 | economics | the study of how society manages its scarce resources | | 0 |
| 6765600049 | microeconomics | the study of how households + firms make resource management decisions + how they interact in markets | | 1 |
| 7356950228 | macroeconomics | the study of economy- wide phenomena resulting from resource management decisions, including inflation, unemployment, + economic growth | | 2 |
| 7356959229 | scarcity | the limited nature of society's resources | | 3 |
| 7356964215 | choice | picking between two things | | 4 |
| 7356984544 | marginal benefits | the change in benefits you would receive from making the decision | | 5 |
| 7356988915 | marginal costs | the change in costs you would receive from making the decision | | 6 |
| 7356999645 | ceteris paribus | "holding all things constant" or "all else be being equal" | | 7 |
| 7357016708 | opportunity costs | whatever must be given up in order to obtain another item | | 8 |
| 7357020126 | money | medium of exchange for goods and services | | 9 |
| 7357023673 | consumer sovereignty | the power of consumers to determine what goods and services are produced | | 10 |
| 7357023674 | utility | the total satisfaction received from consuming a good or service | | 11 |
| 7357025971 | consumer goods | products that are purchased for consumption by the average consumer | | 12 |
| 7357025972 | comparative advantage | ability to produce a good at a lower opportunity cost than another producer | | 13 |
| 7357037514 | command system | an economy that is centrally planned | | 14 |
| 7357040171 | economic system | an organized way in which a state or nation allocates its resources and appropriations goods and services | | 15 |
| 7357042879 | factors of production | the imputs used to produce goods + services
(land, labor, capital, and entrepreneurship) | | 16 |
| 7357048045 | economic resources | scare resources which help with the production of goods and services | | 17 |
| 7357052390 | circular flow model | a visual model of the economy that shows how dollars flow through markers among households + firms | | 18 |
| 7357059823 | capital goods | tangible assests and tools that an organization uses to produce goods or services | | 19 |
| 7357061510 | production possibilities frontier | a curve depicting all maximum output possibilities for two goods | | 20 |
| 7357063814 | competition | two or more parties acting independently to secure the business of a third party by offering the most favorable product | | 21 |
| 7357067684 | law of increasing opportunity costs | opportunity costs increase as greater units of outputs are produced | | 22 |
| 7357067685 | resource market | a marketplace for the exchange of labor, financial capital, or raw materials | | 23 |
| 7357074584 | product market | the marketplace in which a final good is bought and sold | | 24 |
| 7357074585 | market | buyers + sellers determine what + how much to produce/consume | | 25 |
| 7357077679 | market system | the social network that allows interaction between buyers and sellers (includes the rules and regulations) | | 26 |
| 7357083951 | absolute advantage | ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the competitor can | | 27 |
| 7357101625 | production possibility frontier diagram | x= attainable
y= unattainable |  | 28 |
| 7357495313 | economic thinking | everything has a cost, people choose for good reasons, incentives matter, + economic thinking is marginal thinking | | 29 |
| 7357510289 | review 1.5 worksheet | | | 30 |
| 7357516161 | who answers the three basic economic questions in a pure command economy | government | | 31 |
| 7357523230 | who answers the three basic economic questions in a mixed economy | individuals and government | | 32 |
| 7357527284 | who answers the three basic economic questions in a pure market economy | individuals | | 33 |
| 7357535342 | what degree of economic freedom exists for individuals in pure command | private property is non-existent
only government needs are addressed | | 34 |
| 7357539767 | what degree of economic freedom exists for individuals in mixed | they get a say in what happens | | 35 |
| 7357541771 | what degree of economic freedom exists for individuals in pure market | they get total freedom | | 36 |
| 9808751825 | circular flow of income | goods flow from firms to households through the product markets and inputs flow from households to firms through the factor markets |  | 37 |
| 9808784701 | what are the four categories in the circular flow of income | 1. factor markets
2. firms
3. households
4. product markets | | 38 |
| 9808791726 | where does money flow in the circular flow of income | from households to the product market to the firms to the factor markets | | 39 |
| 9809029865 | aggregate income equal | aggregate expenditure = GDP | | 40 |
| 9809053795 | aggregate demand | the total demand for goods and services in the economy |  | 41 |
| 9809068306 | price and GDP have an ________ relationship | inverse
resulting in a negative AD curve | | 42 |
| 9809077294 | the foreign trade effect | when the price level in one country increases, the prices of imports from other countries become relatively less expensive
exports from the country where the price level increased become more expensive | | 43 |
| 9809128697 | the interest rate effect | when the price level increases, the real quantity of money (its purchasing power) decreases
the demand for money increases because people need more money to continue at the same level of consumption | | 44 |
| 9809145444 | the real wealth effect/real balances effect | when the price level increases, the value of assets such as cash and checking-account balances falls
the purchasing value of the money declines | | 45 |
| 9809205953 | acronym to remember the effects that cause the indirect relationship between GDP and price level | F-friends (foreign trade effect)
I-inspire (interest rate effect)
R-relationships (real wealth effect) | | 46 |
| 9809236676 | shifting the AD curve to the right when | consumption increases
investment increases
government carries out expansionary policy
net exports increase | | 47 |
| 9809399163 | when the price level is about AD-AS equilibrium what happens
what about when the price level is below... | when the price is above, surpluses lead to a decrease in the price level
when the price is below, shortages lead to an increase in the price level | | 48 |
| 9809457485 | cost-push/supply-side inflation | when inflation results from an increase in resource costs that shifts the AS curve to the left |  | 49 |
| 9809524325 | stagflation | the combination of rising prices and falling output | | 50 |
| 9809524326 | demand pull inflation | the result of the AD curve shifting out to the right relative to the AS curve for any of the three reasons (FIR- Foreign trade effect, interest rate effect, and real wealth effect) | | 51 |
| 9809545144 | creeping inflation | inflation that remains steady for a long period of time at a low rate | | 52 |
| 9809550834 | galloping inflation | unsteady inflation that exceeds 10 percent per year and grows month after month | | 53 |
| 9809562165 | hyperinflation | rapid price increase in excess of 50 percent per year | | 54 |
| 9809583299 | recessionary gap | when the economy is operating below full employment |  | 55 |
| 9809591011 | full employment | when the economy is operating at full employment
no cyclical unemployment |  | 56 |
| 9809595378 | inflationary gap | when the economy is operating above full employment |  | 57 |
| 9809733641 | the spending multiplier | the number by which the initial amount of new spending should be multiplied to find the total resulting increase in real GDP | | 58 |
| 9809763058 | the marginal propensity to consume (MPC) | the amount by which consumption increases for every additional dollar of real income | | 59 |
| 9809771560 | MPC equation | change in consumption/change in real income | | 60 |
| 9809794078 | marginal propensity to save (MPS) | the fraction of each additional dollar of income saved | | 61 |
| 9809804921 | MPS equation | change in saving/change in real income | | 62 |
| 9809813645 | MPC + MPS = | 1 | | 63 |
| 9809815715 | 1-MPS= | MPC | | 64 |
| 9809832834 | what is money | anything that is accepted as means of payment for goods and services | | 65 |
| 9809852347 | commodity money | is money whose value comes from a commodity of which it is made. Commodity money consists of objects that have value in themselves (intrinsic value) as well as value in their use as money
example: cigarettes used as money in prison | | 66 |
| 9809862951 | fiat money | money that has no intrinsic value | | 67 |
| 9809866182 | intrinsic value | the value of money besides the fact that it can buy something (coins made of precious metal) | | 68 |
| 9809879969 | what are the three main functions of money | 1. medium of exchange
2. store of value
3. unit of account | | 69 |
| 9809883747 | unit of account | money provides a standard unit for price listings and comparisons | | 70 |
| 9809887775 | medium of exchange | takes away bartering | | 71 |
| 9809905700 | store of value | money is nonperishable that will also hold value in the future | | 72 |
| 9809922467 | liquidity | the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price | | 73 |
| 9809941073 | M1 | the narrowest definition of money
the sum of coin and paper money plus checking deposits and travelers checks | | 74 |
| 9809949614 | M2 | is M1 plus savings deposits, small-time deposits, money market mutual funds, and Eurodollar deposits | | 75 |
| 9809988186 | fractional reserve banking system | only a fraction of total deposits are held on reserve and the rest is lent out | | 76 |
| 9809996118 | reserve ratio | the ratio of a bank's reserves to its total deposits | | 77 |
| 9810000802 | reserve ratio equation | bank reserves/total deposits | | 78 |
| 9810070217 | assets | the asset side of t-accounts include required reserves, excess reserves, and loans | | 79 |
| 9810076615 | liabilities | the liability side of t-account include deposits and reserves that can be borrowed from the Fed | | 80 |
| 9810112461 | money creation | the generation of assets caused when an initial deposit to a bank is held partially in reserve and partially redistributed as a loan over and over again | | 81 |
| 9810128535 | money multiplier | the expansion of a country's money supply due to lending | | 82 |
| 9810152725 | money multiplier equation | 1/required reserve ratio | | 83 |
| 9810170946 | what three tools can the Fed use to effect the money supply | 1. required reserve ratio
2. discount rate
3. open market operations | | 84 |
| 9810282441 | discount rate | the interest rate banks pay to borrow money from the Fed
when the discount rate is low, banks are more likely to borrow from the Fed | | 85 |
| 9810297224 | open market operations | involve the Fed's purchase and sale of government securities
"buy big" "sell small" | | 86 |
| 9810332777 | fiscal policy | when the government tries to counter fluctuations in aggregate expenditure with changes in purchases, transfer payments, or taxes | | 87 |
| 9810348699 | expansionary fiscal policy | involves increasing government purchases, increasing transfers, or decreasing taxes | | 88 |
| 9810359681 | contractionary fiscal policy | involves decreasing government spending, decreasing transfers, or increasing taxes | | 89 |
| 9810368436 | government spending multiplier | 1/MPS or 1/1-MPC | | 90 |
| 9810421589 | tax multiplier | indicates the total change in real GDP resulting from each $1 change in taxes | | 91 |
| 9810445868 | tax multiplier equation | -MPC/MPS | | 92 |
| 9810468732 | the multiplier for transfer payments is the same as the tax multiplier but.... | the transfer payment multiplier is positive | | 93 |
| 9810521538 | balance budget multiplier | measures the change in aggregate production triggered by an autonomous change in taxes | | 94 |
| 9810601226 | crowding out | government spending that drives down private sector spending | | 95 |
| 9810623761 | complete crowding out | if the investment completely eliminates the entire boost in real GDP from the increased purchases | | 96 |
| 9810694570 | open economy | trades with other nations to acquire goods that cannot be supplied within its boarders and sells goods in international markets | | 97 |
| 9810722646 | closed economy | countries that do not engage in foreign trade | | 98 |
| 9810733929 | expansionary fiscal policy leads to what in net exports | a decline in net exports | | 99 |
| 9810741019 | contractionary fiscal policy leads to what in net exports | an increase in net exports | | 100 |
| 9810746892 | the loanable funds market | |  | 101 |
| 9810769332 | money market | |  | 102 |
| 9810776046 | supply side economists believe that... | change in tax rates will affect aggregate supply as well as aggregate demand | | 103 |
| 9810792758 | monetary policy | the use of money and credit controls to influence interest rates, inflation, exchange rates, unemployment, and real GDP | | 104 |
| 9810825596 | when investment in capital resources goes down in the current period...... | future output is sacrificed because there is less capital for use in production | | 105 |
| 9810869448 | in order to eliminate or limit the crowding out of investment what can be used | expansionary fiscal and expansionary monetary policy can be used to increase the money supply and decrease the interest rate | | 106 |
| 9886082658 | Keynesian Theory | believe that changes in the money supply will have little effect on interest rates because the demand for money is relatively flat | | 107 |
| 9886178490 | liquidity trap | if the money is completely flat.... then this happens: its when changes on money has no change on interest rates | | 108 |
| 9886249546 | Keynesian Theory Graph | | | 109 |
| 9886292317 | equation of exchange | how economist explain the power of money
MV=PQ
M(money supply)
V(velocity of money)
P(average price)
(quantity of goods and services sold in a period) | | 110 |
| 9886327574 | velocity of money (V) | the number of times per period that the average dollar is spent on final goods and services
"the dollar bounces around the economy" | | 111 |
| 9886350648 | if one item in the equation of exchange changes..... what must happen | one of the other variables must also change | | 112 |
| 9886357230 | quantity theory of money
classical economists and some monetarists | states that in addition to V also being stable, Q is stable in the equation of exchange | | 113 |
| 9886383685 | real interest rate | nominal interest rate-anticipated inflation | | 114 |
| 9886389084 | nominal interest rate | real interest rate + anticipated inflation | | 115 |
| 9886408916 | the fisher effect | states that the real interest rate equals to the nominal interest rate minus the expected inflation rate | | 116 |
| 9886419074 | budget deficit | the difference between federal government spending and tax collections (G-T) in one year | | 117 |
| 9886432307 | national debt | accumulation of past deficit | | 118 |
| 9886448021 | Ricardian Equivalence Theory | deficit financing is no different from tax financing because if taxes are raised then people save their money more | | 119 |
| 9886476151 | expansionary policy moves the economy towards... | deficit because the government is spending more and/or receiving less | | 120 |
| 9886488845 | inflation and unemployment have what kind of relationship | inverse | | 121 |
| 9886491378 | Phillips curves | relationship between inflation and unemployment |  | 122 |
| 9886507433 | a right shift in AD causes what on the Phillips curve | a shift to the left ALONG the curve | | 123 |
| 9886514261 | a right shift in the AS curve causes what in the Phillips Curve | a left shift in the ENTIRE curve | | 124 |
| 9886528941 | long run phillips curve | fixed output level in the long run corresponds with the natural rate of unemployment | | 125 |
| 9886716265 | supply shocks | can be caused by natural disasters | | 126 |
| 9899821375 | balance of payments | a statement of all international flows of money over a given period of time | | 127 |
| 9899837159 | merchandise trade balance equation | merchandise exports - merchandise imports | | 128 |
| 9899859553 | trade deficit | when imports are greater than exports | | 129 |
| 9899862995 | trade surplus | when exports are greater than imports | | 130 |
| 9899868371 | trade deficits or surpluses can be offset by... | the current account or the financial account balances | | 131 |
| 9899874824 | what does the current-account balance include | a nation's transactions with the rest of the world
specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments | | 132 |
| 9899890298 | what does merchandise trade measure | changes in total trades, exports and import | | 133 |
| 9899892880 | current-account balance equation | trade balance + services balance + transfers | | 134 |
| 9899897534 | financial account balance equation | foreign purchase of domestic assets - domestic purchases of foreign assets | | 135 |
| 9899907617 | in order to purchase merchandise, services, capital, or assets from a country, what must be purchases first | that country's currency | | 136 |
| 9899915579 | when dollars become more expensive, what happens to the demand for US dollars | decreases | | 137 |
| 9899917542 | exchange rate | determined by equilibrium in the currency market | | 138 |
| 9899939987 | if there is speculation that the US dollar will increase in value, what happens to the dollar | appreciates
demand increases | | 139 |
| 9899945899 | if japan imports less, what happens to the dollar | depreciates
demand decreases | | 140 |
| 9899950452 | if interest rates in the US increase relative to Japan.... what will happen to the dollar | Japanese will buy currency to invest in the US market
demand increases
appreciates | | 141 |
| 9899958562 | if prices are fast in the US what happens to the dollar | demand decreases
decreases | | 142 |
| 9899965396 | if the demand for money decreases.... does it depreciate or appreciate | depreciate
"D-D" | | 143 |
| 9899967031 | depreciation | a reduction in the value of an asset | | 144 |
| 9899973767 | what does depreciation do to imports | decreases because they become more expensive for domestic consumers
increases exports | | 145 |
| 9899977392 | appreciation | increase in the value of an asset | | 146 |
| 9899985829 | what does appreciation do to imports | increases because they become cheaper
decreases exports | | 147 |
| 9899993973 | arbitrage | the practice of buying at a low price and selling at a high price | | 148 |
| 9900000572 | fixed exchange rate | |  | 149 |
| 9900003024 | flexible exchange rate | the demand is down-sloping and the supply is vertical | | 150 |
| 9900009513 | managed exchange rate | normal FOREX graph |  | 151 |
| 9900016756 | how is economic growth measured | in real GDP or real GDP per capita (per person) | | 152 |
| 9900022215 | growth is seen as what on graphs | an outward shift in the AD or an outward shift in the PPF | | 153 |
| 9900027283 | sources of growth | employment
investment in capital
technology
resource utilization | | 154 |
| 9900041032 | Malthus suggested what?
arithmetic rate and geometric rate | output would grow at a Arithmetic rate (a constant amount each period) and population would grow at a Geometric rate (increasing by a constant proportion per period) | | 155 |
