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FSU Macro Economics 2013 Carrie Lee (1).
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FSU Macro Economics 2013 Carrie Lee (1).
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FSU Macro Economics 2013 Carrie Lee- Centrally planned economies - ANS-economy in which the government decides how economic
resources will be allocated
- Discouraged workers - ANS-people who are available for work but have not looked for a job
during the previous four weeks because they believe no jobs are available for them
-causes the BLS to understate joblessness
- Discuss and identify the determinants of long run econoic growth (increases in labor
productivity, property rights)
Labor productivity - ANS--increases in capital per hour worked
-technological change
-property rights
- Employed workers - ANS-people currently holding a job in the economy, either full time or part
time
- Market economies - ANS-economy in which the decisions of households and firms interacting
in markets allocate economic resources
- Mixed economies - ANS-economy in which most decisions are made by buyers and sellers in
markets but the government plays a significant role in the allocation of resources
- Unemployed workers - ANS-Out of work but actively seeking work.
a "Change in demand" - ANS-is a shift of the entire demand curve
a "change in quantity demanded" - ANS-is a movement along the same demand curve
a "change in quantity supplied" - ANS-is a movement along the same curve
a "change in supply" - ANS-is a shift of the entire supply curve
Absolute advantage (define and discuss implications) - ANS-the ability to produce more of a
good or service than competitors when using the same amount of resources
Adam Smith and the invisible hand principle - ANS-He intends only his own gain, and he is in
this, as in many other cases, led by an invisible hand to promote an end which was not part of
his intention. By pursuing his own interest he frequently promotes that of society more
effectually than when he really intends to promote it."
, Aggregate demand (AD) - ANS-downward bcs:
-the wealth effect
-the interest rate effect
-the international trade effect
aggregate demand curve - ANS-a curve showing the relationship between the price level and
the quantity of real GDP demanded by households firms and the government
allocative efficiency - ANS-production is in accordance with consumer preferences; in particular
every good or service is produced up to the point where the last unit provides an additional
benefit to consumers equal to the additional cost of producing it
Amount in year X dollars = - ANS-Amount in year Y dollars x (Price level year X/Price level year
Y)
as you produce more of one good - ANS-you must give up larger and larger quantities of the
other good (op cost are increasing)
Biases in CPI - ANS--substitution bias
-increase in quality bias
-new product bias
-outlet bias
Business cycles (Define and know phases) - ANS-peak, trough,
-expansion, recession
Comparative advantage (define and discuss implications) - ANS-the ability to produce a good or
service at a lower opportunity cost than competitors
-the basis for trade
Components of GDP - ANS-consumption
-services
-nondurable goods
-durable goods
Investment
-business fixed investments
-residential investment
-changes in business inventories
government purchaes
net exports
Consumer price index (CPI) - ANS-an average of the prices of the goods and services
purchased by the typical urban family of four
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