Econ Final

Which economist is the “original”

Adam Smith

Which economist believed in the power of government in the economy

John Keynes

Which economist said the money supply is the key to the economy

Milton Friedman

Who wrote Wealth of Nations

Adam Smith

Four factors of production

land, labor, capital, entrepreneurship

what are the two tools of fiscal policy, who is in charge

Government spending and taxation, government

what would. be an example of expansionary fiscal policy using two tools?

government spending increasing and lower taxes

how would you change fiscal policy to cure inflation

reduce govt spending and increase taxes

Who is in control of. a command economy

Government

what type of economy does the us employ

mixed

what is opportunity cost

Next best thing you gave up when you made a choice.

what are the two parts of the definition of scarcity

limited supply and people want it

what is microeconomics

business and individuals

what is the difference between normative and positive economic statements

Normative is opinions, positive is facts

4 parts of the buisness cycle

expansion, peak, contraction, trough

which part of the business cycle results in inflation? which part unemployment

Inflation is expansion or peak, unemployment is contraction or recession

the great depression is an example of which part of the business cycle

trough

which part of the business cycle would see an increase in GDP? which is a decrease?

increase is peak or expansion, decrease is contraction or trough

why is the slope of the business cycle curve upward sloping

economic growth, economy is always growing.

what does CPI measure and to who

inflation experienced by consumers

what does PPl measure and to who

inflation to suppliers

which predicts the future of inflation

PPI, bc measures at production level

this measurement of inflation includes the entire economy (goods and services)

GDP-deflator

what is a COLA

increase in income or benefits that is typically made to keep up with rising prices

type of inflation that results from the increase of supplies to a baker

cost -push

a shock to prices or energy oil is which type of inflation

cost-push

which type of inflation results from full employment

demand-pull

why does deflation happen

unemployment

term for both rising inflation and unemployment

stagflation

who is hurt by inflation

savers and lenders

who is included in the labor force

age 16 and up, either employed or unemployed, actively seeking work, non institutionalized

to be counted as employed a person must be 3 things

16 and up, worked in a survey week for wages for an hour or more, paid cash, non institutionalized

what is the difference between a discouraged worker and marginally attached worker

discouraged given up looking bc economy, marginally attached stopped looking for work

structural unemployment

Job collapsed, no skills, bad

Cyclical unemployment

Economy is bad

frictional unemployment

in between jobs, good

define GDP, 3 parts

made this year, made in us, had to be a good or service

On a PPC graph what would best illustrate high unemployment

point in the curve

On a PPC graph what would illustrate an increase in population

shift right

Parts of GDP

C= consumption spending, I= investment spending, G=govt spending, N= imports and exports

name the three tools of monetary policy

open market, reserve requirement, discount rate

how many members of the Fed board of goveners

7

how many regional fed banks

12

who are customers of the fed

banks and government

which tool is most often used by the Fed when changing the money supply

Open market operations

Store value

maintains its value over time and can be used to transfer purchasing power from the present to the future.

medium of exchange

something that is commonly accepted by people to purchase goods and services and is recognized as a standard of value

unit of account

something that can be used to value goods and services, record debts, and make calculations, money

Fiat money

good because we beleive it

commodity money

gold, silver

representative money

checking account, credit card

what does the FDIC do with failing banks

close it and sell

why was the FDIC created

Great depression

using fiscal and monetary how would you cure recessions

fiscal: raise taxes, increase govt spending

monetary: buy open markets, lower RR, lower DR

using fiscal and monetary how would you cure inflation

fiscal: raise taxes, lower govt spending

monetary: sell open markets, raise RR, raise DR.

which of these best describes the US Federal Reserve

responsible for monetary policy/money supply

what is the basic purpose of profits in our market economy

lead businesses to produce what consumers want.

who sets monetary policy in US

Fed Reserve

the prices of meat products in a competitive market are determined by

supply and demand

purchasing power of peoples incomes is most affected by

the inflation rate

who makes fiscal policy

president and congress

example of fiscal policy

federal income tax rate change

which is most likely to improve wages of american workers

increase in productivity

what is the current national rate of unemployment

4.2%

what is most widely used to measure inflation

CPI

current annual rate of inflation

2.3%

what economic policy would most likely be used to combat a recession when inflation is low

increase money supply

economic growth is measured by a positive change in

GDP

there is a deficit in the federal budget when

fed govt spedning is greater than federal tax revenues

if the US dollar increases in value, what will most likely be the effect on US exports of goods to other countries

exports would decrease

a large increase in the number of fast-food resturants in a community is most likely to result in

lower prices and higher quality

a person who starts a buisness to produce a new product

an entrepreneur

an increase from 5% to 8% in the interest rates charged by banks would most likely encourage

people to save

for most ppl, the largest portion of personal income comes from

wages and salaries from their jobs

if the real gross domestic product has increase, but the production of goods has remained the same, then the production of service has

increased

if the price of beef doubled and the price of poultry stayed the same, people would buy

more poultry and less beef

if the us stopped importing automobiles from country X, who would be most likely to benefit

automobile manufacturers in US

if your city govt sets a max amount landlords can charge in rent, what will result?

there will be fewer apartments available than people want to rent.

In the US who determined what goods and services should be produced

producers, consumers, and government

mexico grows fruits and vegetables and argentina produces beef. if mexico voluntary trades fruits and vegetables in exchange for beef

both mexico and argentina benefit from the trade

manufacturers are not able to produce enough product to satisfy demand. If they cannot increase production and demand continues to increase, the price of product will

increase

the resources used in the production of goods and services are limited, so society must

make choices about how to use resources

why does the stock market exist

brings people who want to buy stocks together with those who want to sell.

when a person rents an apartment, who benefits from the transaction

both the person renting and landlord

when deciding which of the two items to purchase, one should always

choose an item after comparing the costs and benefits of both items

when government supply products and services, these products and services usually benefit

more than one person at a time wether they have paid for it or not

when the federal govt expenditures for a year are greater than its revenue for that year the difference is known as

Budget deficit

which of the following are most likely to be helped by inflation.

people who borrowed money at a fixed rate of interest

which of the following would be most likely to accelerate innovation in the computer industry

investing in more research and development in the computer industry

which about the function of money is wrong

money holds its value well in times of inflation

what is the safest investment

US bonds

the highest tax percentage of your paycheck goes to

federal govt