AG_EC 1042: Final Exam
22 Cards in this Set
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Macroeconomics 3 Big Issues
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Economic Growth
Unemployment
Inflation (bad)
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#1 Goal for the Economy
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Economic Growth
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Income Vs. Wealth:
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Income is always stated within some time period
Wealth is what we've been able to accumulate out of our income overtime
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Why do use GDP?
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We use GDP to measure change in income and change in production
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4 Components of GDP
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Consumption
Government Expenditures
Business Investments
Net Exports
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Biggest component of GDP:
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Consumption ~69%
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Economic Growth:
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Expansion of the economy's income and value of production. These are approximately equal in any given year
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How do we calculate Next Exports?
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Exports- Imports
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When we are _____ are stuff; we are going to show positive on income
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Selling
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When we are _____; we are going to show a negative on income
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Buying
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Social Security is based off____ measured by_______
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Income; CPI
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The inflation rate is measured by:
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CPI
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What is required to reduce unemployment rate?
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Real GDP growth rate
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Target for unemployment rate?
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4%-6% full employment
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Target Inflation Rate
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1%-3% a little bit of inflation helps to stimulate the economy
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Economic Growth will help with:
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Deficit/Federal Budget
Inflation
Unemployment
Stable Price
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John Keynes Short Term Goals
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Keynes focused on the short-term primarily
He felt the depression and some previous economic slowdowns were caused by insufficient private spending
So, government should increase spending if private demand was insufficient to keep the economy growing
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Opportunity Cost
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The opportunity cost is the opportunity lost because something else was done
WE ALWAYS WANT THE LOWEST OPPORTUNITY COST
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% Change in Quantity
_____________________
% Change in other Variable
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Elasticity- we will mostly look at Price Elasticity
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Incentive form the government to increase spending in the economy?
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Stimulus-came from the government
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Social Security is the biggest component of this type of tax?
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Pay Roll
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You are considered unemployed if?
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You have no job but you are looking for a job
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AG_EC 1042: Exam 1