question
Tax Wedge
answer
The Difference bwtween whatthe buyer pays and the seller recieves when a tax is placed in amarket
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Deadweight loss
answer
The reduction in total surplus that results from a tax
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Laffer Curve
answer
A graph showing the relationship between the size of tax and the tax revenue collected
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World Price
answer
The price of a good that prevails in the worlds market for that good
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Tariff
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A tax on goods produced abroad and sold domestically
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Inflation
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The Rate at which prices are rising
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Unemployment
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The Percent of the labor force tht is out of work
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Macroeconomics
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The study of economy-wide phenomena
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Microeconomics
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The study of how households and firms make decisions and how they interact in markets
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Total income
answer
Wages, rent, profit
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Total Expenditure
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Consumption, investment, government purchases, and net exports
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Gross Domestic product
answer
MArket value od all final goods and services produced within a ocuntry ina given period of time
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Intermediate production
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Goods that are produced by one firm to be further processed by another firm
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Final production
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Finsihed products sold to the end user
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Gross National Product
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Market value of all final goods and services produced by a nation's residents in a given period of time
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Depreciation
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Value of worn-out equipment and structures
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Consuption
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Spending by household on goods and services, excluding new houseing
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Investment
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Spending of business capital, residential capital, and inventories
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Government Purchases
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Spending on goods and services by all levels of government
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Net exports
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Spending on domestically produced goods by foreigners (exports) minues spending on foreign goods by domestic residents (imports)
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Transfer Payment
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Expenditures by government for which they reveive no goods or services
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Real GDP
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The productions of goods and services valued at base-year prices
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Nominal GDP
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The productions of goods and service valued at currect prices
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Base year
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A year from which prices are used to mearsure real GDP
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GDP deflator
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A meausre of the price level calculated as the ration of nominal GDP to real GDP then multiplied by 100
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Recession
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Period of decline in GDP
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Consumer price inddex
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The ration of the value of the fixed basket purchased by the typical consumer to the basket's value int he base year multiplied by 100
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Inflation rate
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The percent change in a price index
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Core CPI
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A measure of the overall cost of consumer goods and service, excluding food and energy
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Basket (of goods and services)
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The quantities of each item purchased by the typical consumer
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Bureau of LAbor Statistics
answer
The government agency responsible for trackign prices
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Producer price index
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The ration of the value of a fixed basket of goods and services purchased by firms to the basket;s value int he base year multiplied by 100
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Cost of Living
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The income necessary to maintain a constand standard of living
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Standard of Living
answer
material well-being
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Substitution bias
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The inability of the CPI to accountfor cnsumers' substitution toward relatively cheaper goods and services
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Nominal GDP
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Output values at current prices
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Real GDP
answer
Output valued at base-year prices
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Indexed contract
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A contract that requires that a dollar amount be automatically corrected for inflation
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Cost-of -living allowance (COLA)
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An automatic increase in income in order to maintain a constant standard of living
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Nominal interst rate
answer
The interest rate uncorrected for the effects of inflation
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Real interest rate
answer
The interest rate corrected for the effect of inflation
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Real GDP per person
answer
The quantity of goods and services abaliable for the average individual in the economy
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Growth rate
answer
The annual percentae change in output
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Productivity
answer
The quantity of good and services produced for each inity of labor input
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Ohysical capital
answer
The stock of equipment and structures used to produce output
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Factors of production
answer
Input used in production, such as labor, captial, and natural resources
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Human capital
answer
The knowledge and skills that workers acquire throught education, training and expereience
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Natural resources
answer
Inputs into production provided by nature
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Renewable resource
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Natural reosurce that can be reproduced
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Nonrenewable resource
answer
Natural resouces that is limited in supply
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Technological knowledge
answer
A society's understanding about the best ways to produce goods and services
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Production function
answer
The relationship between inputs and outputs from production
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Constant returns to scale
answer
A production process where doubling all of the inputs doubles the output
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Diminishing return
answer
When the incremental increase in output decline as equal increments of an input are added to production
question
Catch-up effect
answer
The property that poorer countries tend to grow more rapidly than richer countries
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Foreign direct investment
answer
Capital investment owned and operated by foreigners
question
Foreign portfolio investment
answer
Capital investment financed with foreign money but operated by domestic residents
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Externality
answer
When the actions of one person affect the well-being of a bystander
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Property rights
answer
The ability of people to exercise control over their resources
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Infant-industry argument
answer
Restricting international trade to protect fledgling domestic industry form foreign competition
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Inward-oriented policies
answer
Policies that increase international trade restictions
question
Outward-oriented policies
answer
policies that decrease international trade restriction
question
Outward-oriented policies
answer
Policies that decrease international trade restrictions
question
Public good
answer
A good that way may all use at the same time without diminishing another's benefits
question
Financial system
answer
The group of institiutions in the economy that help match borrowers and lenders
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Financial markets
answer
Financial institutions through which savers can directly lend to borrowers
question
Financial intermediaries
answer
Financial institutions through which savers can indirectly lend to borrowers
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Bank
answer
Institutions that collects deposits and makes loans
question
Medium of exchange
answer
Spendable asset such as a checking deposit
question
Bond
answer
Certificate of indebtedness or IOU
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Stock
answer
Certificate of ownership f a small portion of a large firm
question
Mutual fund
answer
Institutions that sells shares and uses the proceeds to buy a diversified portfolio
question
Closed economy
answer
An economy with no international transactions
question
National saving (saving)
answer
The income that remains after consumption expenditures and government purchases
question
Private Saving
answer
The income that remains after consumption expenditures and taxes
question
public saving
answer
the tax revenue that the government has left after paying for its spending
question
Budget surplus
answer
An excess of tax revenue over government spending causing public saving to be posititve
question
Budget deficit
answer
A shortfall of tax revenue relative to government spending causing public saving to be negative
question
Government debt
answer
the accumulation of past budget deficits
question
Investment
answer
Expenditures of capital equipment and structures
question
Market for loanable funds
answer
The market in which those who want to save supply funds and those who want to borrow to invest demand funds
question
Demand for loanable funds
answer
The amount of borrowing for investment desure at each real interest rate
question
Supply of loanable funds
answer
The amount of saving made available for lending at each real interest rate
question
Crowding out
answer
A decrease in investment as a result of government borrowing
question
Finance
answer
The field that studies how people make decisions regarding the allocation of resources over time and the handling of risk
question
Present value
answer
The amount of money today that would be needed to produce, using prevailing interest rates, a given future amount of money
question
Future value
answer
The amount of money in the future that an amount of money today will yield, given prevailing interest rates
question
Compounding
answer
The accumulation of a sum of money in an account where interst is earned on previously paid interest
question
Rish averse
answer
Exhibiting a dislike of uncertainty
question
Diversification
answer
The reduction of risk achieved by replacing a single risk with a large number of smaller unrelated risks
question
Firm-specific risk
answer
Risk that affects only a single company
question
Market risk
answer
Risk that affects all companies in the stock market
question
Fundamental analysis
answer
The study of a company's accounting statements and future prospects to determine it value
question
Efficient markets hypothesis
answer
The theory according to which asset prices reflect all publicly available information about the value of an asset
question
Informational efficiency
answer
Reflecting all available information in a rational way
question
Random walk
answer
The path of a variable whose changes are impossible to predict
question
Labor force
answer
The total number of workers, which is the sum of the unemployed and the employed
question
Unemployment rate
answer
Percentage of the labor force that is unemployed
question
Labor-force participation rate
answer
Percentage of the Adult population in the labor force
question
Naturalrate of unemployment
answer
Normal rate of unemployment about which the unemployment rate fluctuates
question
Cyclical unemployment
answer
The deviation of the unemployment rate from its natural rate
question
Discouraged workers
answer
Workers who stop looking for work due to an unsuccessful search
question
frictional unemployment
answer
Unemployment due to the time it take for workers to search for the jobs that best suit their tastes and skills
question
Structural unemployment
answer
unemployment that results because the number of jobs available in some labor markets is insufficient for everyone who wants a job to get one
question
job search
answer
the process by which workers find appropriate jobs given their tastes and skills
question
Sectoral shifts
answer
Changes in the compositions of demand across industries of regions
question
Unemployment insurance
answer
A government program that pays laid-off workers a portion of their original salaries
question
Union
answer
worker association that bargains with employers over wages, benefits, and working conditions
question
Collective bargaining
answer
The process by which unions and firms agree on labor contracts
question
Strike
answer
An organized withdrawal of labor from the firm
question
Insiders
answer
those employed in union jobs
question
outsiders
answer
those not employed in union jobs
question
Right-to-work laws
answer
legislations that makes it illegal to require union membership for employment
question
Efficiency wages
answer
wages voluntarily paid in excess of the competitive equilibrium wage to increase worker productivity
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