VWL 1, FFHS, Semester 3
VWL 1, FFHS, Semester 3
VWL 1, FFHS, Semester 3
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Cartes-fiches
price ceiling
a legal maximum on the price at which a good can be sold
a legal maximum on the price at which a good can be sold
the business practice of selling the same good at different prices to different customers
price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
price elasticity of supply
a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price
price floor
a legal minimum on the price at which a good can be sold
principal
a person for whom another person, called the agent, is performing some act
prisoners’ dilemma
a particular ‘game’ between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial
private goods
goods that are both excludable and rival
private saving
the income that households have left after paying for taxes and consumption
producer price index
a measure of the cost of a basket of goods and services bought by firms
producer surplus
the amount a seller is paid for a good minus the seller’s cost
production function
the relationship between quantity of inputs used to make a good and the quantity of output of that good
production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
productivity
the quantity of goods and services produced from each hour of a worker’s time
profit
total revenue minus total cost
progressive tax
a tax for which highincome taxpayers pay a larger fraction of their income than do low-income taxpayers
proportional tax
a tax for which highincome and low-income taxpayers pay the same fraction of income
public goods
goods that are neither excludable nor rival
public saving
the tax revenue that the government has left after paying for its spending
purchasing power parity
a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries
quantity demanded
the amount of a good that buyers are willing and able to purchase
quantity equation
the equation M × V = P × Y, which relates the quantity of money, the velocity of money, and the dollar value of the economy’s output of goods and services
quantity supplied
the amount of a good that sellers are willing and able to sell
quantity theory of money
a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate
random walk
the path of a variable whose changes are impossible to predict
rational expectations
the theory according to which people optimally use all the information they have, including information about government policies, when forecasting the future
real exchange rate
the rate at which a person can trade the goods and services of one country for the goods and services of another
real GDP
the production of goods and services valued at constant prices
real interest rate
the interest rate corrected for the effects of inflation
real variables
variables measured in physical units
recession
a period of declining real incomes and rising unemployment
refinancing rate
the interest rate at which the European Central Bank lends on a short-term basis to the eroa area banking sector
regressive tax
a tax for which highincome taxpayers pay a smaller fraction of their income than do low-income taxpayers
repo rate
the interest rate at which the Bank of England lends on a short-term basis to the UK banking sector
repurchase agreement (repo)
the sale of a non-monetary asset together with an agreement to repurchase it at a set price at a specified future date
reserve ratio
the fraction of deposits that banks hold as reserves
reserve requirements
regulations on the minimum amount of reserves that banks must hold against deposits
reserves
deposits that banks have received but have not loaned out
risk averse
exhibiting a dislike of uncertainty
rivalry
the property of a good whereby one person’s use diminishes other people’s use
