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ECON Final Flashcard
Econ final
Question | Answer |
---|---|
What was unusual about the 2001 Recession? | 1) GDP never went negative 2) We didn't come out strong like we usually do |
What 3 things make a multiplier larger? | 1) Saving less 2) Spending less on imports 3) Tax cuts |
Worker Productivity | Amt a worker produces within an hour * price |
What's wrong with how we measure GDP/Growth? | 1) Says nothing about unemployment 2) The more we produce, the more we pollute. 3) Doesn't say what was produced. |
3 Policies that shift the A.D. curve to the right | 1) Gov. Spending 2) Tax Cuts 3) Lowering the int. rates |
How long do recessions and expansions last? | Recessions: 11 Months Expansions: 5 years |
Formula for real interest rates | r=i-p (Real = nominal - inflation) |
Real GDP Formula | Real GDP = (nominal GDP)/(price index or GDP deflator) |
Wealth Effect | People spend more because on paper they look wealthier than they are because of their assets. Assume they can sell their assets later to pay for what they spend now. |
Demand-Pull Inflation | Low unemployment rate, high demand for goods and services. Ex.: Vietnam war. demand high since unemployment was low, then the war further increased the demand for goods. |
Cost-Push Inflation | Energy Prices go up, takes more $ to produce goods, prices go up to make up for the higher costs. Ex.: OPEC cutting production of oil |
Stagflation | High unemployment coupled with high inflation |
When is inflation a problem? | When you can't predict it! Prices go up, but wages stay the same. |
Unemployment Formula | Unem= (# of people unem.) / (Labor force (unem. + employed)) |
Frictional Unemployment | Good for the economy. It's voluntary. Looking for a better job, in school, paternity/maternity leave. |
Cyclical | Jobs lost and gained through business cycles. Theoretically, you get your job back when the demand his high again. TEMPORARY. |
Structural | BAD. Skill set doesn't match the job demand. Your job never comes back. |
Nairu Theory | Natural Rate of Unemployment. |