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Stack #4726400
| Question | Answer |
|---|---|
| Consumer Price Index (CPI): | The price of a fixed market basket of consumer goods relative to the market basket price in the base year. |
| Marginal Propensity to Save (MPS) | The amount savings is expected to increase for a one-unit increase in disposable income (MPS=1-MPC). |
| Stability: | An economy is stable if, when it is not at its steady state, market forces act to return it to the steady state. |
| Steady State: | A situation in which the ratios of the major aggregates remain constant or steady over time. |
| Competitive Equilibrium: | A set of prices and allocations such that: Agents optimize (firms maximize profits, consumers maximize utility). Markets clear. |
| Economics: | Is is the study of how to allocate scarce resources to agents with unlimited wants. |
| Microeconomics studies the allocation question for consumers or small agents. | |
| Macroeconomics studies the allocation question for large groups. | |
| A market( or an economy) is stable if when it is not at equilibrium market forces move the market (or economy) toward equilibrium. | |
| The labor force: consists of people with jobs and people without jobs that are actively seeking work | |
| The unemployment rate is the percentage of the labor force that is unemployed and actively seeking work | |
| The labor market participation rate is the percentage of the dult population that is in th labor force | |
| The natural rate of unemployment is The unemployment rate around which the economy fluctuates The long run unemployment rate The steady state unemployment rate | |
| A competitive equilibrium is prices and allocations such that | Agents optimize Markets clear |
| Walras Law | - an economy with n, if n-1 clear, the last one clears |
| Production function is a mathematical expression showing how factors of production can be combined to produce output | |
| Factor of production is a resource that is used to produce output | |
| A production function exhibits constant returns to scale if doubling the inputs results in double the output | |
| Marginal Product of Labor: | The amount of output increases for one unit increase in labor(capital ) |
| A production function exhibits diminishing marginal product if each succession increments of a factors of production results in a smaller marginal product | |
| Marginal propensity to save | : the amount of savings increases for one more nit increase in income ( disposable income ) |
| Investment function | It is the demand for brand new capital goods It is the demand for loanable funds |
| Steady state investment function: | A steady state is a situation in which the ratios of major aggregates remain steady or constant over time The steady state investment function is the amount of investment required to keep the capital labor ratio constant over time |
| Stable Market | A market is stable if when it is not at equilibrium market forces move the market toward equilibrium |
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