question
Own price elasticity of demand
answer
% change in quantity / % change in price
question
cross-price elasticity of demand
answer
% change in quantity demanded of X / % change in price of Y
question
Income elasticity of demand
answer
% change in quantity demanded / % change in income
question
Marginal cost
answer
Price of labor * marginal product of labor
question
GDP
answer
Consumption + investment spending + government purchases + exports - imports
question
Frictional unemployment
answer
Unemployment due to job searching
question
Structural unemployment
answer
Unemployment due to skills no longer valued on the job market
question
Cyclical unemployment
answer
Unemployment due to business cycle
question
Spending multiplier
answer
1/MPS or 1/1 - MPC
question
Utility Maximization
answer
MUx/Px = MUy/Py
question
cost minimization
answer
MPL/PL = MPK/PK
question
Level of output produced
answer
MR = MC
question
Demand increase factors
answer
Increased price of substitute, decreased price of complement, increased income, tastes change in favor of good, price is expected to rise in future, increased number of consumers
question
Supply increase factors
answer
Decreased price of input, decreased price of substitute in production, increased price of complement in production, improved technology, price expected to fall in future, increased number of producers
question
Demand increase effects
answer
Price and quantity increase
question
Supply increase effects
answer
Price decreases, quantity increases
question
Aggregate demand increase factors
answer
Consumers/firms becoming optimistic, increased wealth, small existing stock of physical capital, increased government spending, decreased taxes, increased money supply
question
Aggregate supply factors
answer
Decreased commodity prices, decreased nominal wages, increased productivity
question
Tax multiplier
answer
Spending multiplier - 1
question
Money multiplier
answer
1/reserve ratio
question
expansionary fiscal policy
answer
Increased government spending or decreased taxes, increased aggregate demand, increased real GDP, increased money demand, increased interest rates, decreased investment, slightly decreased spending
question
contractionary fiscal policy
answer
Decreased government spending or increased taxes, decreased aggregate demand, decreased real GDP, decreased money demand, decreased interest rates, increased investment, slightly increased spending
question
Expansionary fiscal policy in open economies
answer
Increased interest rates, increased demand for domestic currency, appreciation
question
Contractionary fiscal policy in open economies
answer
Decreased interest rates, decreased demand for domestic currency, depreciation
question
expansionary monetary policy
answer
Increased money supply and bond prices, decreased interest rate, increased investment, increased aggregate demand, increased real GDP, slightly increased money demand and interest rate
question
contractionary monetary policy
answer
Decreased money supply and bond prices, increased interest rate, decreased investment, decreased aggregate demand, decreased real GDP, slightly decreased money demand and interest rate
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