Fichas

Macroeconomics Section 1

Koda M Macroeconomics AS - Level Inglés 123 fichas 2.085 visitas

Fichas del conjunto (123)

1(Upward-Sloping) Supply CurveThe graphical representation of the law of supply.
2Absolute (Money) PriceThe price of a good in money terms.
3BadAnything from which individuals receive disutility or dissatisfaction.
4Base YearThe year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year.
5BoldfaceThe most highly valued opportunity or alternative forfeited when a choice is made.
6BondAn IOU, or a promise to pay.
7Business CycleRecurrent swings (up and down) in Real GDP.
8Capital Consumption Allowance (Depreciation)The estimated amount of capital goods used up in production through natural wear, obsolescence, and accidental destruction.
9Comparative AdvantageThe situation in which someone can produce a good at lower opportunity cost than someone else can.
10ComplementsTwo goods that are used jointly in consumption. If two goods are complements, the demand for one rises as the price of the other falls (or the demand for one falls as the price of the other rises).
11Consumer Price Index (CPI)The weighted average of prices of a specific set of goods and services purchased by a typical household; a widely cited index number for the price level.
12Consumers' Surplus (CS)The difference between the maximum price a buyer is willing and able to pay for a good or service and the price actually paid. (CS = Maximum buying price - Price paid.)
13ConsumptionThe sum of spending on durable goods, nondurable goods, and services.
14Cyclical Unemployment RateThe difference between the unemployment rate and the natural unemployment rate.
15Deadweight LossThe loss to society of not producing the competitive, or supply-and-demand?determined, level of output.
16DemandThe willingness and ability of buyers to purchase different quantities of a good at different prices during a specific period.
17Demand CurveThe graphical representation of the law of demand.
18Demand ScheduleThe numerical tabulation of the quantity demanded of a good at different prices. A demand schedule is the numerical representation of the law of demand.
19DisequilibriumA state of either surplus or shortage in a market.
20Disequilibrium PriceA price other than the equilibrium price. A price at which the quantity demanded does not equal the quantity supplied.
21Disposable IncomeThe portion of personal income that can be used for consumption or saving. It is equal to personal income minus personal taxes (especially income taxes).
22DisutilityThe dissatisfaction one receives from a bad.
23DividendA share of the profits of a corporation distributed to stockholders.
24Double CountingCounting a good more than once when computing GDP.
25Dow Jones Industrial Average (DJIA)The most popular, widely cited indicator of day-to-day stock market activity; a weighted average of 30 widely traded stocks on the New York Stock Exchange.
26Economic GrowthIncreases in Real GDP.
27Employment RateThe percentage of the civilian noninstitutional population that is employed: Employment rate = Number of employed persons + Civilian noninstitutional population.
28EquilibriumEquilibrium means "at rest." Equilibrium in a market is the price-quantity combination from which buyers or sellers do not tend to move away. Graphically, equilibrium is the intersection point of the supply and demand curves.
29Equilibrium Price (Market-Clearing Price)The price at which the quantity demanded of a good equals the quantity supplied.
30Equilibrium QuantityThe quantity that corresponds to the equilibrium price. The quantity at which the amount of the good that buyers are willing and able to buy equals the amount that sellers are willing and able to sell, and both equal the amount actually bought and sold.
31ExportsTotal foreign spending on domestic (U.S.) goods.
32Face Value (Par Value)Dollar amount specified on a bond; the total amount the issuer of the bond will repay to the buyer of the bond.
33Final GoodA good in the hands of its final user.
34Fixed InvestmentBusiness purchases of capital goods, such as machinery and factories, and purchases of new residential housing.
35Frictional UnemploymentUnemployment that is due to the natural so called frictions in the economy and that is caused by changing market conditions and represented by qualified individuals with transferable skills who change jobs.
36Full EmploymentThe condition that exists when the unemployment rate is equal to the natural unemployment rate.
37Futures ContractAn agreement to buy or sell a specific amount of something (a commodity, a currency, a financial instrument) at an agreed-on price on a stipulated future date.
38GoodAnything from which individuals receive utility or satisfaction.
39Government PurchasesFederal, state, and local government purchases of goods and services, and gross investment in highways, bridges, and so on.
40Government Transfer PaymentsPayments to persons that are not made in return for currently supplied goods and services.
41Gross Domestic Product (GDP)The total market value of all final goods and services produced annually within a country’s borders.
42ImportsTotal domestic (U.S.) spending on foreign goods.
43Inferior GoodA good for which demand falls (rises) as income rises (falls).
44InflationAn increase in the price level.
45Initial Public Offering (IPO)A company's first offering of stock to the public.
46Intermediate GoodA good that is an input to the production of a final good.
47Inventory InvestmentChanges in the stock of unsold goods.
48InvestmentThe sum of all purchases of newly produced capital goods, changes in business inventories, and purchases of new residential housing.
49Investment BankA firm that acts as an intermediary between the company that issues the stock and the part of the public that wishes to buy it.
50Labor Force Participation Rate (LFPR)The percentage of the civilian noninstitutional population that is in the civilian labor force: Labor force participation rate = Civilian labor force + Civilian noninstitutional population.
51Law of DemandAs the price of a good rises, the quantity demanded of the good falls, and as the price of a good falls, the quantity demanded of the good rises, ceteris paribus.
52Law of Diminishing Marginal UtilityOver a given period, the marginal (or additional) utility or satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases.
53Law of Increasing Opportunity CostsAs more of a good is produced, the opportunity costs of producing that good increase.
54Law of SupplyAs the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls, ceteris paribus.
55MacroeconomicsThe branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (e.g., the market for goods and services) or the entire economy.
56MarketAny place people come together to trade.
57MicroeconomicsThe branch of economics that deals with human behavior and choices as they relate to relatively small units: an individual, a firm, an industry, a single market.
58National IncomeTotal income earned by U.S. citizens and businesses, no matter where they reside or are located. National income is the sum of the payments to resources (land, labor, capital, and entrepreneurship): National income = Compensation of employees + Proprietors’ income + Corporate profits + Rental income of persons + Net interest.
59Natural UnemploymentUnemployment caused by frictional and structural factors in the economy: Natural unemployment rate = Frictional unemployment rate + Structural unemployment
60Net Domestic Product (NDP)GDP minus the capital consumption allowance.
61Net ExportsExports minus imports.
62Neutral GoodA good for which demand does not change as income rises or falls.
63Nominal IncomeThe current dollar amount of a person’s income.
64Normal GoodA good for which demand rises (falls) as income rises (falls).
65Normative EconomicsThe study of "what should be" in economics.
66OptionA contract that gives the owner the right, but not the obligation, to buy or sell shares of a stock at a specified price on or before a specified date.
67Own PriceThe price of a good. For example, if the price of oranges is $1, this is its own price.
68Personal IncomeThe amount of income that individuals actually receive. It is equal to national income minus undistributed corporate profits, social insurance taxes, and corporate profits taxes, plus transfer payments.
69Positive EconomicsThe study of "what is" in economics.
70Price CeilingA government-mandated maximum price above which legal trades cannot be made.
71Price FloorA government-mandated minimum price below which legal trades cannot be made.
72Price IndexA measure of the price level.
73Price LevelA weighted average of the prices of all goods and services.
74Producers' (Sellers') Surplus (PS)The difference between the price sellers receive for a good and the minimum or lowest price for which they would have sold the good. (PS = Price received - Minimum selling price.)
75Production Possibilities Frontier (PPF)The possible combinations of two goods that can be produced during a certain span of time under the conditions of a given state of technology and fully employed resources.
76Productive EfficientThe condition in which the maximum output is produced with the given resources and technology.
77Productive InefficientThe condition in which less than the maximum output is produced with the given resources and technology. Productive inefficiency implies that more of one good can be produced without any less of another being produced.
78Real GDPThe value of the entire output produced annually within a country’s borders, adjusted for price changes.
79Real IncomeNominal income adjusted for price changes.
80Relative PriceThe price of a good in terms of another good.
81Shortage (Excess Demand)A condition in which the quantity demanded is greater than the quantity supplied. Shortages occur only at prices below the equilibrium price.
82Spontaneous OrderThe spontaneous and unintended emergence of order out of the self-interested actions of individuals; an unintended consequence of human action, with emphasis placed on the word "unintended."
83StockA claim on a corporation's assets that gives the purchaser a share of ownership in the corporation.
84Structural UnemploymentUnemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified.
85SubsidyA monetary payment by government to a producer of a good or service.
86SubstitutesTwo goods that satisfy similar needs or desires. If two goods are substitutes, the demand for one rises as the price of the other rises (or the demand for one falls as the price of the other falls).
87SupplyThe willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific period.
88Supply ScheduleThe numerical tabulation of the quantity supplied of a good at different prices. A supply schedule is the numerical representation of the law of supply.
89Surplus (Excess Supply)A condition in which the quantity supplied is greater than the quantity demanded. Surpluses occur only at prices above the equilibrium price.
90TechnologyThe body of skills and knowledge involved in the use of resources in production. An advance in technology commonly increases the ability to produce more output with a fixed amount of resources or the ability to produce the same output with fewer resources.
91Tie-in SaleA sale whereby one good can be purchased only if another good is also purchased.
92Total Surplus (TS)The sum of consumers' surplus and producers' surplus. (TS = CS + PS.)
93Transfer PaymentA payment to a person that is not made in return for goods and services currently supplied.
94Unemployment RateThe percentage of the civilian force that is unemployed: Unemployment rate = Number of unemployed persons + Civilian labor force.
95UtilityThe satisfaction one receives from a good.
96YieldThe annual coupon payment divided by the price paid for a bond.
97Adam SmithConceived the idea of the “invisible hand”.
98Adam Smith1776 – An Inquiry into the Nature and Causes of the Wealth of Nations
99Who is considered the father of modern economics and the inventor of the term “invisible hand”? Name his most famous book, published in 1776. What does “invisible hand” mean?Adam Smith is considered the father of economics and coined the term “invisible hand” in order to describe the natural growth of a free market. Smith said, “He neither intends to promote the public interest, nor know how much he is promoting it. He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention”. “Led by an invisible hand to promote an end” is speaking to the natural growth that is realized during a free market as a side effect of one’s own naturally selfish behavior
100b. Did economists in England in the 1800’s get to watch any major economic developments occur? List at least three.1. The wages of common laborer’s increased eight-fold as a result of the Industrial Revolution.
2. The Panic of 1873 which triggered the “Long Depression” in Europe.
3. In 1815, Napoleon lost the Battle of Waterloo causing British debt to soar in value.
101c. One famous economist served as a delegate to the Versailles Peace Conference that ended WWI. He disagreed with the settlement terms imposed by his government and wrote a book that predicted WWII. Name him and the book.John Maynard Keynes served as a delegate to the Versailles Peace Conference and wrote The Economic Consequences of the Peace.
102d. Who was inspired by books like Friedrich Hayek’s like The Road to Serfdom and The Pretense of Knowledge?Margaret Thatcher (Only female British PM)
103e. What duo co-wrote a ground-breaking book on monetary policy? State the authors and the name of the book.Milton Friedman and Anna Schwartz co-wrote Monetary History of the United States 1867 ‐ 1960
104f. Describe Lucas’ view of Rational Expectations; what did his first wife expect after their divorce?Lucas’ theory of Rational Expectations basically states that the decisions each individual makes are a result of both past experiences and rational theories about what will happen in the future, making any macroeconomic model that is based solely on past data flawed.
1052) Draw a graph that depicts the balance between the marginal benefits of flossing your teeth in terms of the number of flossings per week and the marginal costs of flossing your teeth in terms of the expenditure of time. Label the efficient point and the areas on your graph where marginal cost and marginal benefits are unbalanced. In 100 words or less, explain how opportunity cost is related to your graph.As depicted in the graph above, as more time is spent flossing the marginal benefit rises only until the point of equilibrium- at which point the marginal cost of additional time spent flossing begins to outweigh the marginal benefit of it. The same is true in regard to flossing more or less often; while flossing 5 times a week is more beneficial than just 4, flossing 7 times a week is marginally less beneficial than 5.
1063) Draw and label a graph that shows the market for horses and how that market would change with a new law requiring everyone with a previous D.U.I. to travel only by horseback. Describe your result in 100 words or less, including how this is related to scarcity.3) Draw and label a graph that shows the market for horses and how that market would change with a new law requiring everyone with a previous D.U.I. to travel only by horseback. Describe your result in 100 words or less, including how this is related to scarcity.
The graph above depicts the market for horses before and after a change in law requiring D.U.I. offenders to travel solely by horseback. S1 represents the supply curve, while D1 represents the demand curve before the change in law, with D2 representing the demand curve after the change has taken place. As shown, when the demand increases the demand curve shifts to the right.
1074) Draw and label a graph that shows the market for horse and how that market would change with a government imposed maximum price for horses below the market price for horses. Describe your result in 100 words or less, including how this is related to scarcity.The graph above depicts the horse market with and without a government imposed maximum price that is below market value. As shown, limiting the maximum price causes an imbalance (disequilibrium) whereby the demand for horses at a given price exceeds the supply. The graph above shows scarcity at work, as the want for horses exceed the limited supply of them.
1085) Draw and label a Production Possibilities Frontier with two items of your own choosing. Mark an intersection point (A) on the y-axis with 100 units of one good and an intersection point (B) on the x-axis with 100 units of the other good. Create and label a third point (C) roughly in the middle of the PPF. Mark a fourth point (D) that represents failure to maximize production.
1096) Review the Law of Demand and the Law of Supply and the function of Prices. For the law of supply and the law of demand write the law, draw the standard associated graph and state why the line or curve its shape. For prices, state the two functions of price.Law of Supply: As the price of goods rises, so does the supply. Likewise, as the price of goods falls, so does the supply (ceteris paribus).
Law of Demand: As the price of goods rises, the demand falls. Likewise, as the price of goods falls, the demand rises (ceteris paribus).
Typical graph showing supply and demand:
Price: The two functions of price as applied to macroeconomics as a whole are rationing and allocating (signaling). Setting the price to a level not obtainable by all consumers acts to ration the product, while a change in price can serve as a signaling device to producers and consumers alike. A producer may signal to the consumer by lowering the price- causing the consumer to choose between them and a competitor. A consumer may also raise the price, signaling to other producers to do likewise.
1107) For A to E below, please refer to the following chart.
111A) List, approximately, the highest and lowest Real GDP in the United States during this period.Highest: +- 13800
Lowest: +- 2000
112B) List, approximately, the highest and lowest unemployment rates in the United States during this period.Highest: +- 10.9
Lowest: +- 2.5
113C) Officially designated recessions are marked in pink on the chart. What seems to be true about unemployment and real GDP during these periods?The unemployment rate rises while the GDP falls.
114D) In 100 words or less, would a high inflation rate increase or decrease real GDP?High inflation rates would in theory have no effect on real GDP ceteris paribus. Real GDP is a measure of quantities not prices, so it theoretically would account for a rise in inflation. I do think that it’s possible that a high inflation rate could indirectly effect GDP by making it more expensive to produce goods since it may take time for the economy to find equilibrium again after rising, but I’m unable to find anything to support this idea.
115E) In 100 words or less, pick any year and explain why it would have been good or bad to be classified as a frictionally unemployed worker in that particular year, include the definition of frictional unemployment in your answer.Frictional Unemployment is defined as unemployment due to the natural frictions of an economy caused by changing market conditions, and represented by qualified individuals with transferrable skills who change jobs. In other words, someone who should have no trouble finding a job being unemployed. To be frictionally unemployed during the recession of 2008 would have been particularly bad, as this period experienced unemployment rates above 10%. High demand for jobs would have caused it to be an “employer’s market” making it more difficult to find work as well as almost impossible to negotiate terms in the employee’s favor.
1168) Draw and label the standard breakdown of population and labor force as a flow chart showing the various classes of the entire population necessary to accurately measure the unemployment rate. Utilize actual data for the State of Texas from the 2010 Census and from the Bureau of Labor Statistics website to fill in your exhibit. Below your exhibit show your calculations for the State of Texas’ 2010 unemployment rate, employment rate, and labor force participation rate.Unemployment Rate: (Unemployed / CLF)
997,338 / 12,241,970 = 0.081 (8.1%)
Employment Rate: (Employed / CNP)
11,244,632 / 18,569,785 = 0.605 (60.5%)
Labor Force Participation Rate: (CLF / CNP)
12,241,970 / 18,569,785 = 0.659 (65.9%)
1179) Explain the difference between a stock and a bond. Then, provide the answers requested in A to E below:A stock is a portion of the company whereas a bond is a debt owed by the company to be repaid with interest. Stocks are bought either to yield dividends, to be bought low and sold high, or both. Bonds are bought in order to earn interest on the debt.
118A. State the formula for the yield on a stockYield = Dividend per share / Closing Share Price
119B. State the formula for the price – earnings ratio of a stockP-E Ratio = Closing Share Price / Net Earnings Per Share
120C. Define the term face value or par valueFace Value is the amount to be paid upon maturity of a bond.
121D. Define the terms annual coupon payment and coupon rateAnnual Coupon Payment is the annual payment made to a bond holder based on the coupon rate. (CP=CR*FV) The coupon rate is the percentage of the face value the bond holder receives each year until maturity. (CR=CP/FV)
122State the formula for yield or interest rate on a bondThe formula for yield or interest rate of a bond is: Yield = Coupon Payment / Price of Bond
123Ceteris ParibusAll other things equal (Latin)