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ECN CHAP3
Question | Answer |
---|---|
Macroeconomics | Part of economics that deals with the economy as a whole. |
GDP | Gross Domestic Product, Dollar value of all goods and services produced for final sale in the US in a year |
Inflation Rate | Percentage increased in CPI (Consumer Price Index) |
Microeconomics | Part of economics that deals with individual markets and firms. |
RGDP | Real Gross Domestic Product, inflation adjusted GDP |
Recession | Declining period of at least two quarters in a business cycle |
Discouraged Worker Effect | Bad news induces people to stop looking for work, causing the unemployment rate to fall |
Fiscal Policy | Using government spending and tax policy to influence RGDP and prices |
Real balances effect | Higher prices reduce spending power |
Monetary Policy | Using interest rates to influence RGDP and prices |
Cost Push Inflation | Input costs increase and that drives prices up |
Supply Side Economics | Government policy intended to influence the economy via aggregate supply by lowering input costs and reducing regulation |
COLA | Cost of living adjustment that compensates people for the fact that inflation makes the spending power of their income less |
Structurally unemployed | People lose their jobs because of a change in the economy that makes their skills obsolete |
Demand pull inflation | Aggregate demand increases without an increase in aggregate supply |
There is substantial improvement in oil production technology. How does this impact aggregate supply? What might happen to energy prices? | Improvement to technology would increase Aggregate Supply, and when AS goes up, prices go down. |
In a recession, what way would you shift interest rates to fix economy? How would RGDP and PI change? How do you think this will affect unemployment? | Lower interest rates, when interest rates go down, Aggregate Demand goes up. Unemployment would decrease. |
RGDP is not synonymous with social welfare. Name four reasons. Explain one way to measure this with RGDP. How might RGDP be different? | Environmental issues, Home production, Black market, Military Spending. The RGDP would be measured by labeling prices of services. Altered RDGP would be higher than before |