macro - Assignment Essays

question

Economics is the study of how?

answer

Best to use society's scarce resources

question

Given that resources are scarce:

answer

Opportunity costs are experienced whenever choices are made.

question

which of the following is not an example of an economic resource?

answer

A worker in the construction industry
an office building used by an accounting firm
An acre of land in Kansas

All of the above are economic resources.

question

The concept of opportunity cost would become irrelevant if:

answer

Resources were no longer scarce.

question

A production-possibilities curve indicates the

answer

Maximum combinations of goods and services an economy can produce given its available resources and technology.

question

Which is the following correctly characterizes the shape of a production-possibilities curve?

answer

A straight line when there are constant opportunity costs.

question

Cerberis paribus, if korea increases the size of its military, then it's

answer

Production of non-military goods will decrease.

question

A decrease in available resources would cause:

answer

The production-possibilities curve to shift inward.

question

The market mechanism may best be defined as

answer

The use of market prices and sales to signal desired output.

question

The invisible hand refers to:

answer

The allocation of resources by market forces.

question

In a mixed economy like that in the united states, the question of WHAT to produce is determined by

answer

Both government directives, and price signals and sales in markets.

question

Refer to figure 1.7 The cost of producing at point G rather than point D is

answer

AB units of food

question

A buyer is said to have a demand for a good only when

answer

The buyer is both willing and able to purchase the good at alternative prices

question

Jessie's demand schedule for candy bars indicates

answer

Her opportunity cost of buying candy bars

question

According to the law of demand, the quantity of a good demanded in a given time period

answer

Increases as its price falls, ceteris paribus.

question

Ceteris Paribus, which of the following would generally cause an increase in the demand for automobiles?

answer

An increase in consumers' income.

question

Assume that pencils and pens are substitutes. If the price of pencils rises, then we will see

answer

An increase in the demand for pens.

question

A change in the price of a good

answer

Results in a change in quantity supplied.

question

A shifts in supply is defined as a change in

answer

Supply because of a change in a non-price determinant

question

Ceteris Paribus, which of the following is most likely to cause a decrease in the supply of skateboards?

answer

An increase in the cost of materials used to produce skateboards

question

if corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when, ceteris paribus:

answer

The price of wheat changes.

question

The market mechanism is consistent with:

answer

A trial and error process.
the invisible hand.
Equilibrium.
All of the above

question

An increase in the equilibrium price of electricity can be caused by

answer

An increase in the demand for electricity.

question

After a major snowstorm last winter, some college students earned extra money by clearing driveways of snow for $25. Town officials determined that $25 was too high and set a price ceiling of $15 for this service. Which of the following was the most likely result?

answer

Fewer driveways were cleared.

question

If the actual market price were fixed at $15 per unit in Figure 3.3

answer

There would be a surplus of 40 units

question

National income accounts assist

answer

Economic policy makers in formulating policies and evaluating performance.

question

The GDP

answer

C + I + G + (X-M)
The sun of value added at every stage of the production process
The total market value of final goods and services
All of the above

question

The value of goods that have been produced but not sold during a give time period:

answer

Increases business inventories and GDP for the period

question

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

answer

Nominal GDP can increase simply because of price increases over time.

question

If the price level is 100 for 1999 and the price level is 103.3 in 2001 a nominal GDP in 2001 of 8800 billion would mean that real GDP in 2001 would be closest to

answer

8,518.9 billion

question

A nation's capital stock will decline, ceteris paribus, if

answer

the value of depreciation exceeds the growth in the value of real GDP.
Net investment is negative.
Depreciation exceeds gross investment
All of the above

question

If the price of computers falls 6% during a period when the level of average prices falls 12% the relative price of computers compared with other goods?

answer

increases

question

Because some people's income rise faster than inflation while others people's incomes rise more slowly

answer

There are redistribution effects from inflation

question

If inflation is 15% per year and you receive a 11% raise in income, then your

answer

real income falls, but nominal income rises

question

If the CPI increases from 200 to 240 for one year the rate of inflation for that year is

answer

20%

question

The labor-force participation rate is the number

answer

in the labor force divided by the total population

question

suppose that in a population of 220 million people, 115 million are in the labor force and 99 million are employed. The unemployment rate is

answer

13.9%

question

if the number of employed is 220,000 the labor force is 250,000, the number of discouraged workers is 15000 and the number of underemployed is 15000 then the unemployment rate is?

answer

12%

question

Automobile workers in Detroit who are unemployed because of foreign imports at the same time that job vacancies exist for coal miners in West Virginia would most likely be classified as

answer

structurally unemployed

question

Scarcity

answer

lack of enough resources to satisfy all desired uses of those resources

question

factors of production

answer

Resources input used to produce goods and services.. Ex Land, Labor, Capital, entrepreneurship.

question

Capital

answer

final goods produced for use in the production of other goods, such as equipment and structures.

question

Entrepreneurship

answer

The assembling of resources to produce new or improved products and technologies

question

Economics

answer

the study of how best to allocate scarce resources among competing uses

question

opportunity cost

answer

the most desired goods or services that are forgone in order to obtain something else

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

Efficiency

answer

maximum output of a good from the resources used in production

question

economic growth

answer

an increase in output an expansion of production possibilities

question

3 basic decisions

answer

What to produce? How to produce? For whom to produce?

question

market mechanism

answer

the use of market prices and sales to signal desired outputs (or resource allocations)

question

Laissez-faire

answer

the doctrine of "leave it alone," of nonintervention by government in the market mechanism

question

mixed economy

answer

an economy that uses both market signals and government directives to allocate goods and resources

question

market failure

answer

an imperfection in the market mechanism that prevents optimal outcomes

question

government failure

answer

government intervention that fails to improve economic outcomes

question

Macroeconomics

answer

the study of aggregate economic behavior of the economy as a whole

question

Microeconomics

answer

the study of individual behavior in the economy of the components of the larger evonomy

question

Ceteris Paribus

answer

the assumption of nothing else changing

question

factor market

answer

Any place where factors of production (e.g., land, labor, capital) are bought and sold.

question

production market

answer

any place where finished goods and services (products) are bought and sold

question

opportunity cost

answer

the most desired goods or services that are forgone in order to obtain something else

question

supply

answer

the ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus

question

demand

answer

the willingness and ability to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus

question

demand schedule

answer

a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus

question

demand curve

answer

a curve describing the quantities of a good consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

question

Law of Demand

answer

the quantity of good demanded in a given time period increases as it's prices falls, ceteris paribus.

question

substitute goods

answer

goods that substitute for each other; when the price of good x rises, the demand for good y increases, ceteris paribus

question

complementary goods

answer

goods frequently consumed in combination; when the price of good x rises, the demand for good y falls, ceteris paribus

question

Ceteris Paribus

answer

the assumption of nothing else changing

question

shift in demand

answer

a change in the quantity demanded at any (every) price

question

market demand

answer

the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands

question

market supply

answer

the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus

question

law or supply

answer

the quantity of a good supplied in a given time period increases as it's price increases, ceteris paribus.

question

equilibrium price

answer

the price at which the quantity of a good demanded in a given time period equals the quantity supplied

question

market mechanism

answer

the use of market prices and sales to signal desired outputs (or resource allocations)

question

price floor

answer

lower limit set for the price of a good

question

market surplus

answer

the amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply

question

market shortage

answer

the amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand

question

price ceiling

answer

an upper limit imposed on the price of a good.

question

demand shift

answer

a change in the amount buyers want to purchase at a given price

question

national income accounting

answer

the measurement of aggregate economic activity, particularly national income and its components

question

Gross Domestic Product (GDP)

answer

the total market value of all final goods and services produced within a nations borders in a given time period.

question

GDP per capita

answer

total GDP divided by total population; average GDP

question

intermediate goods

answer

goods or services purchased for use as input in the production of final goods or in services

question

Value Added

answer

the increase in the market value of a product that takes place at each stage of the production process

question

Nominal GDP

answer

the value of final output produced in a given period, measured in the prices of that period (current prices)

question

Real GDP

answer

the value of final output produced in a given period adjusted for changing prices

question

base year

answer

the year used comparative analysis the basis for indexing price changes

question

Inflation

answer

an increase in the average level of prices of goods and services

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

Depreciation

answer

the consumption of capital in the production process; the wearing out of plant and equipment

question

Net Domestic Product

answer

GDP minus depreciation

question

investment

answer

Expenditures on (production of) new plant, equipment, and structures (capital) in a given time period, plus changes in business inventories.

question

gross investment

answer

total investment expenditure in a given time period

question

net investment

answer

gross investment minus depreciation

question

Exports

answer

Goods and Services sold to other countries

question

Imports

answer

goods and services purchased from other countries

question

net exports

answer

exports minus imports

question

National Income (NI)

answer

total income earned by current factors of production: GDP less depreciation, plus net foreign factor income

question

Personal Income

answer

income received by households

question

Disposable Income (DI)

answer

After-tax income of households; personal income less personal taxes.

question

savings

answer

"That part of disposable income (income after tax) not spent on goods and services. Income that is not spent, but put aside."

question

labor force

answer

All persons over age 16 who are either working for pay or actively seeking paid employment

question

labor force participation rate

answer

the percentage of the adult population that is in the labor force

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

unemployment

answer

the inability of labor force participants to find jobs

question

Okun's Law

answer

One percent more unemployment is estimated to equal 2 percent less output

question

unemployment rate

answer

the proportion of the labor force that is unemployed

question

discouraged worker

answer

an individual who isn't actively seeking employment but would look for or accept a job if one were available

question

Underemployment

answer

people seeking full-time paid employment who work only part-time or are employed at jobs below their capability

question

seasonal unemployment

answer

unemployment due to seasonal changes in employment or labor supply

question

frictional unemployment

answer

Brief periods of unemployment experienced by people moving between jobs or into the labor market

question

structural unemployment

answer

unemployment caused by a mismatch between the skills (or location) of job seekers and the requirements (or location) of available jobs

question

cyclical unemployment

answer

unemployment attributable to a lack of job vacancies, that is, to an inadequate level of aggregate demand

question

inflationary flashpoint

answer

the rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply

question

full employment

answer

the lowest rate of unemployment compatible with price stability variously estimated between 4 % and 6 % unemployment

question

natural rate of unemployment

answer

long-term rate of unemployment determined by structural forces in labor and product markets

question

Outsourcing

answer

the relocation of production to foreign countries

question

Inflation

answer

an increase in the average level of prices of goods and services

question

Deflation

answer

a decrease in the average level of prices of goods and services

question

relative price

answer

the price of one good in comparison with the price of other goods

question

nominal income

answer

the amount of money income recurved in a given time period, measured in current dollars

question

real income

answer

income in constant dollars; nominal income adjusted for inflation

question

money illusion

answer

the use of nominal dollars rather than real dollars to gauge changes in one's income or wealth

question

Hyperinflation

answer

inflation rate in excess of 200% lasting at least one year

question

bracket creep

answer

the movement of taxpayers into higher tax brackets (rates) as nominal incomes grow

question

Consumer Price Index (CPI)

answer

a measure (index) of changes in the average price of consumer goods and services

question

inflation rate

answer

the annual percentage rate of increase in the average price level (price level year 2 - price level year 1)/price level year 1

question

base year

answer

the year used for comparative analysis; the basis for indexing price changes

question

item weight

answer

the percentage of total expenditure spent on. specific product uses to commit inflation indexes

question

core inflation rate

answer

changes in the CPI, excluding food and energy prices

question

GDP deflator

answer

a price index that refers to all goods and services included in GDP

question

Nominal GDP

answer

the value of final output produced in a given period, measured in the prices of that period (current prices)

question

Real GDP

answer

the value of final output produced in a given period adjusted for changing prices

question

price stability

answer

the absence of significant changes in the average price level officially refunded as a rate of inflation of less than 3 percent

question

Cost-of-living adjustment (COLA)

answer

Automatic adjustments of nominal income to the rate of inflation

question

real intrest rate

answer

nominal intrest rate - inflation rate

question

Adjustable Rate Mortgage (ARM)

answer

a mortgage (home loan) that adjusts the nominal interest rate to changing rates of inflation

question

inflationary flashpoint

answer

the rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply

1 of 138

question

Economics is the study of how?

answer

Best to use society's scarce resources

question

Given that resources are scarce:

answer

Opportunity costs are experienced whenever choices are made.

question

which of the following is not an example of an economic resource?

answer

A worker in the construction industry
an office building used by an accounting firm
An acre of land in Kansas

All of the above are economic resources.

question

The concept of opportunity cost would become irrelevant if:

answer

Resources were no longer scarce.

question

A production-possibilities curve indicates the

answer

Maximum combinations of goods and services an economy can produce given its available resources and technology.

question

Which is the following correctly characterizes the shape of a production-possibilities curve?

answer

A straight line when there are constant opportunity costs.

question

Cerberis paribus, if korea increases the size of its military, then it's

answer

Production of non-military goods will decrease.

question

A decrease in available resources would cause:

answer

The production-possibilities curve to shift inward.

question

The market mechanism may best be defined as

answer

The use of market prices and sales to signal desired output.

question

The invisible hand refers to:

answer

The allocation of resources by market forces.

question

In a mixed economy like that in the united states, the question of WHAT to produce is determined by

answer

Both government directives, and price signals and sales in markets.

question

Refer to figure 1.7 The cost of producing at point G rather than point D is

answer

AB units of food

question

A buyer is said to have a demand for a good only when

answer

The buyer is both willing and able to purchase the good at alternative prices

question

Jessie's demand schedule for candy bars indicates

answer

Her opportunity cost of buying candy bars

question

According to the law of demand, the quantity of a good demanded in a given time period

answer

Increases as its price falls, ceteris paribus.

question

Ceteris Paribus, which of the following would generally cause an increase in the demand for automobiles?

answer

An increase in consumers' income.

question

Assume that pencils and pens are substitutes. If the price of pencils rises, then we will see

answer

An increase in the demand for pens.

question

A change in the price of a good

answer

Results in a change in quantity supplied.

question

A shifts in supply is defined as a change in

answer

Supply because of a change in a non-price determinant

question

Ceteris Paribus, which of the following is most likely to cause a decrease in the supply of skateboards?

answer

An increase in the cost of materials used to produce skateboards

question

if corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when, ceteris paribus:

answer

The price of wheat changes.

question

The market mechanism is consistent with:

answer

A trial and error process.
the invisible hand.
Equilibrium.
All of the above

question

An increase in the equilibrium price of electricity can be caused by

answer

An increase in the demand for electricity.

question

answer

Fewer driveways were cleared.

question

If the actual market price were fixed at $15 per unit in Figure 3.3

answer

There would be a surplus of 40 units

question

National income accounts assist

answer

Economic policy makers in formulating policies and evaluating performance.

question

The GDP

answer

C + I + G + (X-M)
The sun of value added at every stage of the production process
The total market value of final goods and services
All of the above

question

The value of goods that have been produced but not sold during a give time period:

answer

Increases business inventories and GDP for the period

question

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

answer

Nominal GDP can increase simply because of price increases over time.

question

If the price level is 100 for 1999 and the price level is 103.3 in 2001 a nominal GDP in 2001 of 8800 billion would mean that real GDP in 2001 would be closest to

answer

8,518.9 billion

question

A nation's capital stock will decline, ceteris paribus, if

answer

the value of depreciation exceeds the growth in the value of real GDP.
Net investment is negative.
Depreciation exceeds gross investment
All of the above

question

If the price of computers falls 6% during a period when the level of average prices falls 12% the relative price of computers compared with other goods?

answer

increases

question

Because some people's income rise faster than inflation while others people's incomes rise more slowly

answer

There are redistribution effects from inflation

question

If inflation is 15% per year and you receive a 11% raise in income, then your

answer

real income falls, but nominal income rises

question

If the CPI increases from 200 to 240 for one year the rate of inflation for that year is

answer

20%

question

The labor-force participation rate is the number

answer

in the labor force divided by the total population

question

suppose that in a population of 220 million people, 115 million are in the labor force and 99 million are employed. The unemployment rate is

answer

13.9%

question

if the number of employed is 220,000 the labor force is 250,000, the number of discouraged workers is 15000 and the number of underemployed is 15000 then the unemployment rate is?

answer

12%

question

Automobile workers in Detroit who are unemployed because of foreign imports at the same time that job vacancies exist for coal miners in West Virginia would most likely be classified as

answer

structurally unemployed

question

Scarcity

answer

lack of enough resources to satisfy all desired uses of those resources

question

factors of production

answer

Resources input used to produce goods and services.. Ex Land, Labor, Capital, entrepreneurship.

question

Capital

answer

final goods produced for use in the production of other goods, such as equipment and structures.

question

Entrepreneurship

answer

The assembling of resources to produce new or improved products and technologies

question

Economics

answer

the study of how best to allocate scarce resources among competing uses

question

opportunity cost

answer

the most desired goods or services that are forgone in order to obtain something else

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

Efficiency

answer

maximum output of a good from the resources used in production

question

economic growth

answer

an increase in output an expansion of production possibilities

question

3 basic decisions

answer

What to produce? How to produce? For whom to produce?

question

market mechanism

answer

the use of market prices and sales to signal desired outputs (or resource allocations)

question

Laissez-faire

answer

the doctrine of "leave it alone," of nonintervention by government in the market mechanism

question

mixed economy

answer

an economy that uses both market signals and government directives to allocate goods and resources

question

market failure

answer

an imperfection in the market mechanism that prevents optimal outcomes

question

government failure

answer

government intervention that fails to improve economic outcomes

question

Macroeconomics

answer

the study of aggregate economic behavior of the economy as a whole

question

Microeconomics

answer

the study of individual behavior in the economy of the components of the larger evonomy

question

Ceteris Paribus

answer

the assumption of nothing else changing

question

factor market

answer

Any place where factors of production (e.g., land, labor, capital) are bought and sold.

question

production market

answer

any place where finished goods and services (products) are bought and sold

question

opportunity cost

answer

the most desired goods or services that are forgone in order to obtain something else

question

supply

answer

the ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus

question

demand

answer

the willingness and ability to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus

question

demand schedule

answer

a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus

question

demand curve

answer

a curve describing the quantities of a good consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

question

Law of Demand

answer

the quantity of good demanded in a given time period increases as it's prices falls, ceteris paribus.

question

substitute goods

answer

goods that substitute for each other; when the price of good x rises, the demand for good y increases, ceteris paribus

question

complementary goods

answer

goods frequently consumed in combination; when the price of good x rises, the demand for good y falls, ceteris paribus

question

Ceteris Paribus

answer

the assumption of nothing else changing

question

shift in demand

answer

a change in the quantity demanded at any (every) price

question

market demand

answer

the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands

question

market supply

answer

the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus

question

law or supply

answer

the quantity of a good supplied in a given time period increases as it's price increases, ceteris paribus.

question

equilibrium price

answer

the price at which the quantity of a good demanded in a given time period equals the quantity supplied

question

market mechanism

answer

the use of market prices and sales to signal desired outputs (or resource allocations)

question

price floor

answer

lower limit set for the price of a good

question

market surplus

answer

the amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply

question

market shortage

answer

the amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand

question

price ceiling

answer

an upper limit imposed on the price of a good.

question

demand shift

answer

a change in the amount buyers want to purchase at a given price

question

national income accounting

answer

the measurement of aggregate economic activity, particularly national income and its components

question

Gross Domestic Product (GDP)

answer

the total market value of all final goods and services produced within a nations borders in a given time period.

question

GDP per capita

answer

total GDP divided by total population; average GDP

question

intermediate goods

answer

goods or services purchased for use as input in the production of final goods or in services

question

Value Added

answer

the increase in the market value of a product that takes place at each stage of the production process

question

Nominal GDP

answer

the value of final output produced in a given period, measured in the prices of that period (current prices)

question

Real GDP

answer

the value of final output produced in a given period adjusted for changing prices

question

base year

answer

the year used comparative analysis the basis for indexing price changes

question

Inflation

answer

an increase in the average level of prices of goods and services

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

Depreciation

answer

the consumption of capital in the production process; the wearing out of plant and equipment

question

Net Domestic Product

answer

GDP minus depreciation

question

investment

answer

Expenditures on (production of) new plant, equipment, and structures (capital) in a given time period, plus changes in business inventories.

question

gross investment

answer

total investment expenditure in a given time period

question

net investment

answer

gross investment minus depreciation

question

Exports

answer

Goods and Services sold to other countries

question

Imports

answer

goods and services purchased from other countries

question

net exports

answer

exports minus imports

question

National Income (NI)

answer

total income earned by current factors of production: GDP less depreciation, plus net foreign factor income

question

Personal Income

answer

income received by households

question

Disposable Income (DI)

answer

After-tax income of households; personal income less personal taxes.

question

savings

answer

"That part of disposable income (income after tax) not spent on goods and services. Income that is not spent, but put aside."

question

labor force

answer

All persons over age 16 who are either working for pay or actively seeking paid employment

question

labor force participation rate

answer

the percentage of the adult population that is in the labor force

question

production possibilities

answer

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

question

unemployment

answer

the inability of labor force participants to find jobs

question

Okun's Law

answer

One percent more unemployment is estimated to equal 2 percent less output

question

unemployment rate

answer

the proportion of the labor force that is unemployed

question

discouraged worker

answer

an individual who isn't actively seeking employment but would look for or accept a job if one were available

question

Underemployment

answer

people seeking full-time paid employment who work only part-time or are employed at jobs below their capability

question

seasonal unemployment

answer

unemployment due to seasonal changes in employment or labor supply

question

frictional unemployment

answer

Brief periods of unemployment experienced by people moving between jobs or into the labor market

question

structural unemployment

answer

unemployment caused by a mismatch between the skills (or location) of job seekers and the requirements (or location) of available jobs

question

cyclical unemployment

answer

unemployment attributable to a lack of job vacancies, that is, to an inadequate level of aggregate demand

question

inflationary flashpoint

answer

the rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply

question

full employment

answer

the lowest rate of unemployment compatible with price stability variously estimated between 4 % and 6 % unemployment

question

natural rate of unemployment

answer

long-term rate of unemployment determined by structural forces in labor and product markets

question

Outsourcing

answer

the relocation of production to foreign countries

question

Inflation

answer

an increase in the average level of prices of goods and services

question

Deflation

answer

a decrease in the average level of prices of goods and services

question

relative price

answer

the price of one good in comparison with the price of other goods

question

nominal income

answer

the amount of money income recurved in a given time period, measured in current dollars

question

real income

answer

income in constant dollars; nominal income adjusted for inflation

question

money illusion

answer

the use of nominal dollars rather than real dollars to gauge changes in one's income or wealth

question

Hyperinflation

answer

inflation rate in excess of 200% lasting at least one year

question

bracket creep

answer

the movement of taxpayers into higher tax brackets (rates) as nominal incomes grow

question

Consumer Price Index (CPI)

answer

a measure (index) of changes in the average price of consumer goods and services

question

inflation rate

answer

the annual percentage rate of increase in the average price level (price level year 2 - price level year 1)/price level year 1

question

base year

answer

the year used for comparative analysis; the basis for indexing price changes

question

item weight

answer

the percentage of total expenditure spent on. specific product uses to commit inflation indexes

question

core inflation rate

answer

changes in the CPI, excluding food and energy prices

question

GDP deflator

answer

a price index that refers to all goods and services included in GDP

question

Nominal GDP

answer

the value of final output produced in a given period, measured in the prices of that period (current prices)

question

Real GDP

answer

the value of final output produced in a given period adjusted for changing prices

question

price stability

answer

the absence of significant changes in the average price level officially refunded as a rate of inflation of less than 3 percent

question

Cost-of-living adjustment (COLA)

answer

Automatic adjustments of nominal income to the rate of inflation

question

real intrest rate

answer

nominal intrest rate - inflation rate

question

Adjustable Rate Mortgage (ARM)

answer

a mortgage (home loan) that adjusts the nominal interest rate to changing rates of inflation

question

inflationary flashpoint

answer

the rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply

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