MacroEcon dunton
Terms
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- Incentives
- Rewards for engaging in a particular activity
- Economics
- The study of how people allocate their limited resources to satisfy their unlimited wants
- Resources
- things ised to produce goods and services to satisfy peoples wants
- aggregates
- total amounts or quantities
- normative economics
- value judgements about economic policies. statement of what ought to be.
- positive economics
- scientific predictions
- Land, Labor, Physical Capital, Human Capital, Entrepreneurship
- Natural Resources, Humans who work, all manufactured resources, education and training of workers, component of human resources that preforms the functions of raising capital.
- Comparative Advantage
- The ability to produce a good or service at a lower opportunity cost compared to other producers.
- Absolute Advantage
- The ability to produce more units of a good or service using a given quantity of labor or resource inputs. Equivalently, the ability to produce the same quantity of of a good or service using fewer units of labor or resource points.
- Law of Demand
- The observation that there is a negative, or inverse, relationship b/w the price of any good or service and the quantity demanded, holding other factors constant
- demand curve
- a graphical rep of the demand schedule; a negatively sloped line showing the inverse relationship bw the price and the QD
- Ceteris Paribus Conditions
- determinants of the relationship bw price and quantity that are unchanged along a curve; cause a curve Shift. Income, Tastes and Preferences, Expectations, Market Size
- Change in Demand versus Change in Quantity Demanded
- Change in demand happens when there is a change in the ceteris paribus conditions which makes a shift. Quantity demanded is a specific quantity at a specific price rep by a specific point on the demand curve = movement
- Law of supply
- the observation that the higher the price of a good, the more sellers will make available over a specified time period, other things being equal.
- A change in the ____ leads to a change in the quantity supplied
- price
- Price ceiling
- a legal maximum price that may be charged for a good/service
- price floor
- a legal minimum price that can be charged
- Tax base
- the value of goods, services, wealth or incomes subject to taxation
- Tax rate
- the proportion of a tax base that must be paid to a government as taxes
- Marginal tax rate
- the change in taxes due/ change in taxable income
- Average tax rate
- total taxes due/ total taxable income
- tax bracket
- a specified interval of income to which a specific and unique marginal tax rate is applied
- proportional tax
- a tax system in which regardless of an individuals income, the tax bill comprises exactly the same proportion
- progressive tax
- as income increases, a higher % of the additional income is paid as taxes.
- Regressive taxation
- as more dollars are earned, the % of tax paid on them falls
- Labor force
- people 16 and up who either have jobs or who are looking and available for jobs. # employed + # unemployed
- Labor force participation rate
- % of noninstitutionalized working- age individuals who are employed or seeking employment
- Frictional Unemployment
- unemployment due to the fact that workers must search for appropriate job offers. this takes time, and so they remain temp unemployed.
- Structural unemployment
- resulting from a poor match of workers\' abilities and skills with current requirements of employers
- Cyclical Unemployment
- resulting from business recessions that occur when total demand is insufficient to create full employment
- Seasonal unemployment
- resulting from the seasonal pattern of work in specific industries. constructions, agriculture, tourism, etc.
- Full employment
- an arbitrary level of unemployment that corresponds to \"normal\" friction in the labor market (today assumed to be around 5%)
- Inflation
- sustained increase in the average of all prices of goods and services
- Deflation
- decrease in average of all prices
- Gross Domestic Product (GDP)
- the total market value of all final goods and services produced during a year by factors of production located within a nation\'s borders.
- Rule of 70
- a rule stating that the approximate number of years required for per capita real GDP to double is equal to 70 divided by the average rate of economic growth
- Four functions of money
- 1. medium of exchange 2. unit of accounting 3. store of value 4. a standard of deferred payment.
- The fed...
- 1 supplies the economy with fiduciary currency 2. provides payment-clearing systems 3. holds depository institutions\' reserves 4. acts as the gov\'ts fiscal agent 5. supervises depository institutions. 6. acts as the \"lender of last resort\" 7. regulates the money supply 8. intervenes in foreign currency markets
- Fractional Reserve Banking
- a system in which depository institutions hold reserves that are less than the amount of total deposits
- reserves
- in the us fed reserve system, deposits held by Fed Res district banks for depository institutions, plus depository institutions\' vault cash
- required reserves
- value of reserves that a depository institution must hold in the form of vault cash or deposits within the fed
- Excess reserves
- the difference between actual reserves and required reserves
- required reserve ratio
- % of total transactions deposits that the Fed requires depository institutions to hold in the form of vault cash or deposits with the Fed.
- Net Worth
- the difference between assets and liabilities
- Balance of trade
- the difference between exports and imports of physical goods
- Capital Account
- a category of balance of payments transactions that measures flows of real and financial assets
- Par value
- the officially determined value of a currency