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