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Is interested in understanding global phenomena such as economic growth, economic cycles, unemployment, inflation and international trade, among others.
The key theoretical advances that ___________ made were that changes in money supply and peoples' expectations can lead to any possible combination of unemployment and inflation.
Deflation Rate = Price Index Year 2 - Price Index Year 1 /Price Index Year 1 * 100
Economic Growth
When the amount that the quantity supplied exceeds the quantity demanded when the market price is above the equilibrium price
_______- key economic statistics that provide information about business cycles and trends in overall economic performance.
Accurately explains history
The curve slopes upward and to the right of the origin and also referred to as a direct relationship is called ___________.
Makes reasonable predictions about the future
In Demand Curve Shifts, a change in any of these will cause the demand to curve shift to the right or left, when the demand curve is shifting to the right. The rightward shift is called ___________________.
Absolute Advantage
When many suppliers and many consumers (competitive) engaged in trade without interference from government (free).
Things that are available in sufficient amounts to satisfy all possible needs. There is no opportunity cost involved in their use or consumption.
___________is the amount that the quantity demanded exceeds the quantity supplied when the market price is below the equilibrium price.
Structural Unemployment - unemployment that results from the normal seasonal change in aggregate economic activity.
The principle of Occam's Razor -cut away all the complicating details that do not significantly contribute to the reliability or validity of a model.
What theory goes beyond explaining specialization by individuals to justify why macroeconomics also specialize and engage in trade ?
It is comparative advantage or opportunity cost and not absolute advantage that yields an incentive for specialization and trade.
Increase skill from repetition
__________ is when many suppliers and many consumers engaged in trade without interference from government.
The production possibilities curve is often referred to as a ___________.
___________, as more scarce resources are used to increase production of one good or service, production of another good or service falls by larger and larger amount.
A market is in _______ when the quantity demanded is equal to quantity supplied at the market price.
A _______is a collection of suppliers and consumers engaged in trade.
Production is a function of the economy's use of capital, K, labor, L, and a multifactor productivity index, A.
Expenditure approach categories are;
One of the Macroeconomic objectives is to develop better laws and government policies to maximize welfare of the society.
___________ is also known as the Implicit GDP Deflator or Implicit Price
____________ is a condition of constant rates of growth in economic measures. With no technological change and is represented by identical constant growth rates in the labor force, total output, and the level of capital.
Nominal GDP =Value of output measured at actual prices (current dollar output). Does not correct for inflation
___________ is the increase in total cost from the production or consumption of one additional unit of a good or service.
Percent Change in (P x Q) = (Percent Change in P) + (Percent Change in Q)
The _____ suggested that standards of living of the poor and wealthy countries should converge on each other.
A recession that is major both in scale and duration.
___________if a person can produce a good or service with lower opportunity cost than can another
The unemployment rate is negatively related to changes in the growth rate of real GDP. Moreover, output fluctuates more than unemployment over the business cycle.
____________consists of transactions that are not documented for various reasons.
Exchange rates can be fixed or floating.
__________is the price at which the quantity demanded is equal to the quantity supplied. Other things being unchanged, there is no tendency for this price to change.
The _______ is one of the central issues in macroeconomic theory and provides the starting point for understanding the complex relationships between the various measures of macroeconomic performance and the role of government economic policy.
Real GDP - value of total output corrected for any changes in prices. Also referred to as "constant-dollar" GDP. Real GDP is reported quarterly by the Bureau of Economic Analysis
Which of the following statements are positive in nature and which are normative?
Economics is not an exact science.
A _______ is the opposite situation of a price ceiling.
The Purchasing Power Parity exchange rate will often differ from the actual exchange rate.
_______ is the point at which an expansionary phase ends and a contractionary phase begins.
Percentage decline in the average level of prices.
Another problem with the unemployment rate as a measure of overall labor activity is that the employed may not be working as much as they would like
Production is a function of the economy's use of capital, K, labor, L, and a productivity index, A.
Analysis of the behavior of individual decision-making units (individuals, households, firms).
____________________the amount by which the value of a firm's finished products exceeds the value of goods and services the firm purchases
_____________ unemployment arising from frictional, structural, and seasonal unemployment, further as described as the unemployment rate that coexists with macroeconomic stability.
Tangible things that satisfy people's wants and desires.
Artificial barriers of Trade
The price of one currency in terms of another currency.
Floating means that exchange rate is steady or constant in day to day basis according to the market.
GDP Per Capita
__________ is also referred to as a direct relationship. As the value of X increases, the value of Y increases.
Nominal GDP= Current year Quantities x Base year Prices
Price Index = current-year total cost of market basket of goods and services / base-year total cost of market basket of goods and services
_______ increasing economic growth and price inflation.
___________ a legal requirement that maintains the market price above the equilibrium price.
GDP
During an economic recovery phase where real GDP is _____ it is quite possible for the unemployment rate to increase through changes in frictional and structural unemployment.
____________________ is measured by the money (dollar) value of all final goods and services produced byan economy during a given period of time, usually a year.
_____ applied the concept of declining returns when he conjectured in 1798 (An Essay on the Principle of Population) that the world population would eventually outgrow the capability to produce food.
Neoclassical growth theory explains that output is a function of growth in factor inputs especially on capital, labor and technological progress.
An increase in income leads to an increase in demand (the demand curve shifts to the right).
Y = A * f(K, L ) is the formula used to measure _____.
The _____ test would involve entering economic growth rates for selected countries in a spreadsheet and statistically comparing growth rates for those two groups of years.
Nominal interest rate - expected rate of price inflation.
_________ represents a combination of percentage change and marginal analysis.
_______- an economic indicator that changes after the overall economy has changed. Examples include investment spending, the unemployment rate, and interest rates.
Incentive to invest resources in developing specialized tools
The inverse relationship between inflation and unemployment is illustrated using the _______.
_________ cannot be used in empirical analysis.
Economists use the term "business cycle" to refer to:
______ Latin term that used in economics means all other non-price factors that affect the amount we consume or produce do not change.
_________ is a very small increase of decrease in the quantity of some variable.
Phillip’s law
A growth rate is simply the amount of increase or decrease divided by the starting level.
Natural Rate of Unemployment - consistent with frictional, structural, and seasonal unemployment.
Employed persons + Unemployed persons = Natural Rate of Unemployment
Nominal Interest Rate
Opportunity cost.
If price is above the equilibrium price, what causes it to return to the equilibrium level? If it is below equilibrium, what forces it up?
Contraction
Hyperinflation is generally caused by governments printing money to finance large fiscal deficits caused by wars, revolutions, the establishment of new states, or exorbitant social programs.
Real GDP may not be a perfect indicator of our well-being because it ignores some of the unmeasured benefits and costs of our behavior that we discussed in the earlier chapter on GDP accounting. But it is the best indicator that has been consistently measured over time.
Comparative advantage
Frictional Unemployment - stable labor force in an unstable economy. Unemployment that results from a decline in aggregate economic activity.
___________ as the price of a good or service increases the quantity you would be willing and able
The __________ is a graphic representation of the market supply schedule and the Law of Supply
_____- a symptom of disequilibrium where aggregate output > aggregate demand
Recurrent, systematic fluctuations in the level of business activity, often characterized by changes in growth rate of real GDP.
In exchange rates,_____ means that they fluctuate day to day according to the market.
Pro- cyclical
The market value of final goods and services produced by labor and property supplied by the residents of a nation during a specific period, usually 1 year.
Solution: always use the previous year as the base year. Individual year deflators are "chained" (multiplied) together to produce the GDP deflator.
____________ is the real value of the quantity of goods and services consumed by the average person, typically measured as average real GDP per person, per worker, or per family.
A severe recession in both scale and duration is called _____.
Percentage increase in the average level of prices is called ___________.
Real GDP =Value of output based on prices of some base period ("constant" dollar output) eliminates effect of inflation.
___________ is nominal wage corrected for the average level of prices.
____________ cannot be used in empirical analysis.
Independent variable can be seen in the _______________ of the equation.
Compute the opportunity cost , where 10 mobile phones is to 5 Simcards.
Contribution of increase in labor to the growth in output is the most important.
We can represent a single person's decision about how many items to purchase over a year in a table called a _______.
What kind of resources in which examples are petroleum, natural gas, coal, and nonfuelminerals extracted from the ground is included in GDP in the products produced from them
_________ is the level of output at which the labor market is at its natural rate of unemployment.
Negotiation cost
Based on the percentage you got above. If the average inflation rate last year was 8%, are you better or worse off?
Trough
Net Domestic Product (NDP) = C + In + G + NX = GDP - depreciation
An empirical study is a test of a hypothesis or theory using actual data
_____ an increase in government debt is accompanied by an increase in the foreign trade deficit (imports exceeds exports)
Net Investment (In) = Gross Investment (Ig) - Depreciation
Analysis of the behavior of an economy as a whole.
___________ by definition equal to the change in the capital stock plus depreciation.
The market value of final goods and services (i.e., sold to final consumers) produced by a nation during a specific period, usually 1 year.
Common characteristics in each of the relationship of two variables is that the change in independent variable X produces a change in dependent variable Y and represented in a math equation.
_________ = Total employed + total unemployed.
Consumer Price Index=Only goods and services purchased by households included Quantities fixed (the market basket) Imports (of consumer goods) included.
Understanding measures of Elasticity is critically important in Microeconomics, references to Elasticities are infrequent in Macroeconomics
The selected goods and services is called the food basket.
If there is no technical progress, the output per capita will be on its growth level.
_______ is the point at which a contractionary phase ends and an expansionary phase begins.
Business cycle refers to the physical output of the economy or _____.
What are the two different ways that the quantity of purchases of a good can change?
The fundamental method of exchange is ____________.
When the amount that the quantity demanded exceeds the quantity supplied when the market price is below the equilibrium price.
Recession is
A shift of the demand curve in response to a change in one of the variables assumed to be held constant under the ceteris paribus assumption (e.g., income), holding the good's price constant.
Complementary and Conflicting Goals
In exchange rates,_____ means that they stay at the same value as set by the government.
______________ is a movement along a fixed supply curve in response to a change in the price of that good, ceteris paribus (everything else unchanged).
When the price of resources in the production process increases, firms try to pass on these increases to the product price this is called ________.
Condition that savings is equal to investment
What do you call the hours (not rendered) beyond government mandated 40 hour work week
_____- government deficit spending reduces private investment spending
The overall goal of government economic policy is to promote economic _____.
____________ is the change in the quantity of total output resulting from a unit change in a variable input, keeping all other inputs unchanged.
Peak
Disposable income to national income formula where,
The short-term fluctuations in economic activity we see are called business cycles.
Low Unemployment
When the average level of prices declines, this is called _________.
___________ = (Number Unemployed / Labor Force) * 100
___________ is a term used to denote a very high rate of inflation.
The disposable income (net pay after taxes) a household receives can be disposed of in one of two ways: consumption or savings. where,
Cartesian coordinate system is not the usual graphical representation.
Percentage of Change = ending value- starting value /starting value x 100.
Percent Change in (Q/L) = (Percent Change in Q) - (Percent Change in P).
GDP Deflator = All final goods and services included. Quantities variable. Imports excluded.
Economic growth is the change in aggregate real GDP or average real GDP per person over time.
__________ is described as a fixed-weight price index (also referred to as a Laspeyres price index), which measures the cost of a fixed basket of goods relative to a base period
__________as the shift of the supply curve in response to a change in one of the variables assumed to be held constant under the ceteris paribus assumption (e.g., technology), holding the good's price constant.
A market is in ______________ when the quantity demand is equal to quantity supplied at the market price.
_____ is measured by comparing the amount of goods and services produced with the factors (e.g., capital and labor) used in production.
Seasonal Unemployment - stable labor force in a dynamic economy with mismatch between skills of labor and skills demanded.
_____- recurring patterns of economic expansion, then contraction, then expansion again.
Real GDP - value of total output corrected for any changes in prices. Also referred to as "constant-dollar" GDP.
Quantity of goods and services that can be purchased with a given amount of money.
GNP
Indivisibility is when some goods can be broken into small tradable quantities.
A primary measure of the health and welfare of an economy is the growth rate of real GDP, or total physical output of the economy
A legal requirement that maintains the market price below the equilibrium price.
In methods of measuring aggregate output, ___________ is the amount of spending by the final purchasers of output.
Microeconomic demand and supply curves depend on differences in ________ prices
___________ Unemployment is associated with a stable labor force in a dynamic economy
Money is a common medium of exchange and represents the general purchasing power.
Unfortunately the unemployment rate is not a perfect indicator of economic activity or inactivity because ___________________.
What approach that measures total economic activity by adding the amount spent by allultimate or final consumers of products and service?
The market interest rate that is paid by borrowers to lenders.
Gross National Product (GNP) = C + Ig + G + NX
Is the number of unemployed individuals divided by the total of those employed and unemployed total labor force.
Real Interest Rate
In law of demand and supply:Why is the price of gasoline usually higher than the summer and Christmas vacation than in ordinary months?
Reduced time wasted shifting between tasks
The ___________ presented a menu of policy trade-offs
__________as the price of a good or services increases, the quantity you would be willing and able to purchase during some period of time declines.
Expansion
Growth models focus on the long-run trend in output, more commonly called potential or full-employment output, rather than the short-run booms and busts in which an economy cycles around its long-term trend.
_________ is the amount of labor supplied by individuals at a given real wage rate.
Exchange Rate refers to the quantity of currency in circulation.
Okun’s law
Intangible but useful activities that are valued by people.
Goods and services those are scarce. There is an opportunity cost involved in their use or consumption.
Aggregate real GDP is of limited use because it does reveal whether the residents of a given country are better or worse off.
Direction of Movement
__________- persons in the labor who are working but are not working all the hours they are willing and able to.
Endogenous growth theory, first developed by _____
___________is the quantity of goods and services that can be purchased with a given amount of money; the value of money
The Ceteris Paribus assumption is of critical importance.
_____ - government deficits do not affect the overall level of demand in an economy. Taxpayers expect that any increase in the deficit now must be repaid later and increase their savings in anticipation.
__________ Unemployment is associated with business cycles and, more particularly, with temporary downturns in the economy
The _______ is a graphic representation of the market demand schedule and the Law of Demand
A period of decline in total output, income, employment, and trade, usually lasting from six months to a year.
Labor is a service that is supplied by individuals and demanded by firms.
__________is the amount that the quantity supplied exceeds the quantity demanded when the market price is above the equilibrium price.
___________ is the amount of labor demanded by firms at a given real wage rate.
Timing
__________________ - the market value of final goods and services (i.e., sold to final consumers) produced by a nation during a specific period, usually 1 year.
_________ is the change in the quantity of total output resulting from a unit change in a variable input, keeping all other inputs unchanged.
The following are the categories of government policies designed for long term economic growth except,
Participation Rate (percent) = Total Labor Force/Civilian Population * 100
________ represent a cost to not only individuals but also the macroeconomy or reduce overall economic efficiency in that they represent an unnecessary cost of transforming resources into final goods and services.
Transportation cost
Accurately describes historical outcomes, and It must make reasonable predictions about the results of future observations.
Percentage increase in the average level of prices.
_____- Aggregate Output (or National Income), Y = Aggregate Demand, AD
______________ - average output per hour of labor (e.g., total real GDP divided by the total number of labor-hours worked)
Production Costs = opportunity costs of resources required (e.g., cash costs) to change prices.
_________ is the real value of the quantity of goods and services consumed by the average person, typically measured as average real GDP per person, per worker, or per family.
Opportunity cost is:
In comparing growth of countries as to levels of output or income across countries we run into the problem of differences in currencies
__________ proposes that the microeconomic labor-supply demand model is not oneof simply workers, but the supply and demand of efficient workers
___________ = Labor Force / Civilian Non institutional Population * 100
In general, countries that have a larger investments in capital goods are wealthier and have economic growth rate.
The GDP Deflator is described as a variable-weight price index (also referred to as a Paasche price index)
__________ a variable that depends on the value of the independent variable(s) can be seen in the left side of the equation.
True or False: NX = X - M or Net Exports= Exports - Imports
_______ - an economic indicator that changes before the economy has changed. Examples include new orders for capital goods, building permits, unemployment insurance claims, and stock prices.
Equilibrium in the labor market occurs where the aggregate quantity of labor supplied equals the aggregate quantity of labor demanded
_______ the unemployment rate is negatively related to changes in the growth rate of real GDP. Moreover, output fluctuates more than unemployment over the business cycle.
An increase in income leads to a decrease in demand (the demand curve shifts to the left).
If a person produces more than a person can be presumed to consume more so is wealthier or richer.
According to __________, that if more of the time is spent in one activity then you must invest your resources to develop specialized tools or machines to aid me in my task.
__________- percentage rate of increase in the price index per period.
____________ is when we specialize and both benefit after the exchange
When the government increases money supply faster than the economy is growing you generally end up with deflation.
Compute for the employment rate (in percentage)
Consumer Price Index (CPI) includes
_______ is declining economic growth and growing unemployment.
What are the Three (3) Macroeconomic Goals?
Determine what it would cost to purchase the quantities of goods and services in the market basket in some year identified as the base year.
Inflation = Increase in average level of prices
The empirical test would involve entering economic growth rates for selected countries in a spreadsheet and statistically comparing growth rates for those two groups of years.
Price Stability
Unemployment Rate (percent) = Unemployed/Total Labor Force * 100
The best available economic measure of quantity is _________.
Population & wealth, Savings & wealth, Rich & Poor and Convergence, Consumption & the Golden Rule
____________ a graph that indicates all possible combinations of two goods or services that can be produced within an economy given the full and efficient use of all available resources.
Real GDP= Current year Quantities x Current year Prices
___________ is a legal requirement that maintains the market price below the equilibrium price.
Counter cyclical
Under Implications of the model, a change in the government deficit can affect the following variables, what are these three variables
Demand-Pull Inflation - caused by an increase in aggregate demand for goods and services.
____________ is the change in production that occurs when all resources are proportionately increased (increased by the same percentage).
Neoclassical growth model pioneered by Denison
When the average level of prices increases over time the economy is said to be experiencing _______________.
_____ simply means that if the labor force grows at 2% per year and capital grows at 2% per year (the capital-labor ratio in this steady state model is constant) then output also grows at 2% per year.
Economic growth is
__________ is an advantage of a person who can produce a good or service with fewer resources than another person.
Transfer Payment - a payment made for which no goods or services are provided in return. Transfer payments are excluded from _______.
Political Science is the study of mankind in the ordinary business of life.
The point where the curve crosses the vertical axis is referred as ____________.
___________ relates to the effect that a small or unit change one variable has on another variable.
_____ is a function of the economy's use of capital, K, labor, L, and a multifactor productivity index, A.
Last year you were paid Php 470 per day as office employee. This year you received a Php 25 per hour raise. By what percentage did your rate increased?
GDP Deflator = Nominal (current-dollar) GDP /Real (constant-dollar) GDP * 100
______________ is the characteristic of money or currency where it can be used as a medium of exchange for any good or service.
Ceteris paribus, means
Analysis of the behavior of an economy as a whole is ___________.
Investment is equal to the change in the capital stock plus depreciation.
Aggregate demand is equal to consumption plus investment plus government spending plus net exports as shown in equation. where,
A line showing X and Y pair is referred as ____________.
The slope of a curve can be determined from a graph by dividing the vertical change in the Y variable or rise by the horizontal change in the X variable or run.
_____________________- the market value of final goods and services produced by labor and property supplied by the residents of a nation during a specific period, usually 1 year.
_____- a symptom of disequilibrium where aggregate output < aggregate demand
___________ is referred to as the ceteris paribus assumption
__________is the measure of the average level of prices for some specified bundle of goods and services, relative to the prices in a specified base year
What is the value of total output (nominal GDP) corrected for any changes in prices.
Employed Persons - persons 16 years and over who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week.
Comparing growth rates across countries is not a problem despite differences in currencies because growth rates are _____ of the units of measurement.
A country should specialize in a good in which it has comparative advantage.
Macroeconomics is analysis of the behavior of an economy as a nation.
What are the steps in solving macroeconomic equilibrium model solution method?
_________ is the change in production that occurs when all resources are proportionately increased (increased by the same percentage).
During economic contractions, when output is falling, the inflation rate also declines.
The test of a proposition or theory using actual observations or numbers is
Law of Demand Ceterus Paribus
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