Essential Macroeconomics
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1.
Another term for having 0
cyclical unemployment.
Full employment
23.
What happens to AS/AD when
government decreases spending?
AD shifts left
2.
Comparing the cost of
something is an example of?
Unit of account
24.
What happens to AS/AD when
government increases spending?
AD shifts right
3.
How does the Fed contract
the money supply?
Sells bonds
25.
What happens to AS/AD when
government increases taxes?
AD shifts left
4.
How does the Fed expand the
money supply?
Buys bonds
26.
What happens to AS/AD when
interest rates fall?
AD shifts right
5.
How do trade barrier affect
domestic consumers?
Trade barriers hurt
domestic consumers
27.
What happens to AS/AD when
interest rates rise?
AD shifts left
6.
How do trade barrier affect
domestic producers?
Trade barriers help
domestic producers
28.
What happens to AS/AD when oil
prices fall?
SRAS shifts right
7.
How do trade barrier affect
foreign producers?
Trade barriers hurt foreign
producers
29.
What happens to AS/AD when oil
prices rise?
SRAS shifts left
8.
How do trade barriers affect
prices?
Prices rise
30.
What happens to AS/AD when
productivity decreases?
LRAS and SRAS shift
left
9.
How do trade barriers affect
workers?
Some workers are helped
31.
What happens to AS/AD when
productivity increases?
LRAS and SRAS shift
right
10.
How do you calculate GDP?
Y=C+I+G+X-M
32.
Demand will shift.
11.
How do you calculate the
expenditure multiplier?
1 / (1-MPC)
What happens to demand when
there is a change in income?
33.
How do you calculate the
labor force participation rate?
(labor force / population) x
100
What happens to demand when
there is a change in the price?
Change in quantity
demanded. No shift.
34.
Interest rates rise
How do you calculate the
unemployment rate?
(# of unemployed/labor
force) x 100
What happens to interest rates
when there is less money?
35.
Interest rates decline
How do you compare living
standards?
Real GDP per Capita
What happens to interest rates
when there is more money?
36.
Supply will shift.
Rapidly adjusting prices and
wages mean AS has what kind
of slope?
Vertical
What happens to supply when
there is a change in production
costs?
37.
Saving money for later is an
example of?
Store of value
What happens to supply when
there is a change in the price?
Change in quantity
supplied. No shift.
38.
Sticky prices and wages mean
AS has what kind of slope?
Positive
What happens when demand
shifts left?
Price and quantity
decrease.
39.
Three examples of automatic
stabilizers?
Unemployment
compensation, social
security, progressive taxes
What happens when demand
shifts right?
Price and quantity
increase.
40.
What happens when supply shifts
left?
Quantity decreases but
price increases.
19.
Using money to buy
something is an example of?
Medium of exchange
41.
What happens when supply shifts
right?
Quantity increases but
price decreases.
20.
What are the three fiscal
policy lags?
Recognition,
Implementation, Impact
42.
What happens when the Fed buys
bonds?
Interest rates fall
21.
What are the three functions
of money?
Medium of exchange, unit
of account, store of value
43.
What happens when the Fed sells
bonds?
Interest rates rise
22.
What happens to AS/AD when
government cuts taxes?
AD shifts right
44.
What is a budget deficit?
Government spending
is greater than tax
revenue
12.
13.
14.
15.
16.
17.
18.
45.
What is cyclical unemployment?
Laid off due to a recession
46.
What is frictional unemployment?
Between jobs
47.
What is M1?
Cash + Coins + Checking Accounts
48.
What is M2?
Cash + Coins + Checking Accounts + Savings
49.
What is MPC?
Marginal propensity to consume
50.
What is MPS?
Marginal propensity to save
51.
What is structural unempoyment?
Job eliminated
52.
What is the national debt?
The total amount owed by the federal government
53.
What kind of policy should the Federal Reserve use during a recession?
Expansionary monetary policy
54.
What kind of policy should the Federal Reserve use when there is inflation?
Contractionary monetary policy
55.
What kind of policy should the government use to fight a recession?
Expansionary fiscal policy
56.
What kind of policy should the government use to fight inflation?
Contractionary fiscal policy
57.
What rate does the Fed lend to banks at?
Discount rate
58.
What rate to banks lend to each other at?
Federal Funds Rate
59.
Where do AD and SRAS cross in an inflationary gap?
To the right of LRAS
60.
Where do AD and SRAS cross in a recessionary gap?
To the left of LRAS
61.
Which AD/AS curve do regulations impact?
SRAS
62.
Who controls the money supply?
Federal Reserve
63.
Will a change in resources shift AD or AS?
AS
64.
Will a change in spending shift AD or AS?
AD