Midterm 2 Econ

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What two things cause shifts in the demand for labor?

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Economics

44 Terms

1

What two things cause shifts in the demand for labor?

Changes in price of output and productivity

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2

When real wage INCREASES, what shifts left?

Demand of labor

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3

When real wage DECREASES, what shifts left?

Supply of labor

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4

What two things cause shifts in the supply of labor?

Changes in the working age population and change in working age population willing to work

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5

Name the three types of unemployment

Structural frictional and cyclical

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6

Formula for Saving

Current income minus spending on current needs

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7

Formula for saving rate

saving over income

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8

Formula for wealth

assets minus liabilities

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9

Is saving a stock or flow value?

Flow

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10

Is wealth a stock or flow value?

Stock

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11

Formula for change in wealth

Saving plus capital gains minus capital losses

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12

What are the three reasons for household saving?

Life cycle saving Precautionary saving Bequest saving

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13

As real interest rate goes up, how does saving change?

Saving increases

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14

National saving formula

S = Y-C-G

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15

Private saving formula

Sprivate = Y-T-C

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16

Public saving formula

Spublic = T-G

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17

Saving is the sum of what?

Private and public saving

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18

The variable T means what?

Net taxes

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19

Net taxes formula

Total taxes minus transfer payments minus government interest payments

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20

Private saving is the sum of what?

Household and business saving

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21

The surplus of the government budget surplus is what?

Public saving

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22

What two factors affect investment decisions?

Costs and benefits

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23

What is costs of investment?

Price of new capital goods Real interest rate

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24

Does real interest rate shift the supply and demand curves in SAVING AND INVESTMENT?

No

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25

What is money?

Asset used to make purchases

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26

What are the three functions of money?

Medium of exchange Unit of account Store of value

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27

What is M1?

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28

What causes cyclical unemployment?

Business cycle

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29

What equals natural unemployment?

structural plus frictional

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30

What is u*?

Natural rate of unemployment

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31

What is u?

Rate of unemployment

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32

The formula for cyclical unemployment is?

Unemployment minus natural unemployment

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33

Okun’s Law

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34

What causes slowdowns or speed ups in REAL GDP growth?

Potential output growth Output gaps develop

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35

Do prices change immediately with a change in demand?

No

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36

How do firms meet demand in the SHORT run?

Preset prices

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37

How do firms meet demands in the LONG run?

Total spending analysis

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38

What is the equilibrium of an open economy?

SK + I = I

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39

What does unemployment do during recessions?

Rise

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40

Which type of unemployment is associated with recessions?

Cyclical

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41

Which industries are most affected during recessions?

Durable goods

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42

How do recessions affect the rate of inflation?

It declines

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43

What does Y* mean?

Potential output

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44

Output gap formula

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