Macroeconomics - CH21 Macroeconomics: The Big Picture
Chapter 21 - Macroeconomics: The Big Picture
Chapter 21 - Macroeconomics: The Big Picture
Set of flashcards Details
| Flashcards | 48 |
|---|---|
| Language | English |
| Category | Macro-Economics |
| Level | University |
| Created / Updated | 03.10.2020 / 23.06.2025 |
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Explain the term paradox of thrift.
when families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending. This reduction in spending depresses the economy as consumers spend less and business react by laying off workers. As a result, families and businesses may end up worse off than if they hadn’t tried to act responsibly by cutting their spending.
The paradox of thrift is an attempt by households to increase their savings can cause a recession. But a higher level of savings plays a crucial role in encouraging long-run economic growth.
Should I go to business school or take a job right now?
What determines the salary Google offerts to Cherie Camajo, a new MBA?
What determines the cost to a university or college of offering a new course?
What government policies should be adopted to make it easier for low-income students to attend college?
What determines whether Citibank opens a new office in Shanghai?
How many people are meployed in the economy as a whole this year?
What determines the overall salary levels paid to workers in a given year?
What determines the overall level of prices in the economy as a whole?
What is the growth effect of increased education level on the economy as a whole?
What determines the overall traade in goods, services, and financial assets between the United States and the rest of the world?
According to Keynesian economics...
...economic slumps are caused by inadequate spending, and they can be mitigated by government intervention. After the Great Depression, Keynesian economics provided the rationale for government intervention through monetary policy and fiscal policy to help a depressed economy.
Explain the term monetary policy
Monetary policy is primarily concerned with the management of interest rates and the total supply of money in circulation and is generally carried out by a central bank.
Explain the term fiscal policy
Fiscal policy addresses taxation and government spending, and it is generally determined by government legislation.
__________ focuses on decision making by individuals and firms and the consequences of the decisions made. __________ focuses on the overall behavior of the economy.
What are recessions?
Recessions, or contractions, are periods of economic downturn when output and employment are falling
What are expansions?
Expansions, or recoveries, are periods of economic upturn when output and employment are rising.
What is the business cycle?
The business cycle is the short-run alternation between recessions and expansions.
How does a business cycle looks like? How do expansions, recesscion, peaks and trough look like?
A rising unemployment rate could be a sign that a new __________ might be under way.
Because __________ cause many people to lose their jobs and income, they spend less money on the market.
Explainn the term long-run economic growth.
The long-run economic growth is the sustained upward trend in the economy’s output over time.
A rising overall level of prices is called __________, whereas a falling overall level of prices is called __________.
What's an inflation?
A rising overall level of prices
What's a deflation?
A falling overall level of prices.
Explain the term price stability?
The economy has price stability when the overall level of prices changes slowly or not at all.
cash loses value over time
the amount of goods and services you can buy with a given amount of cash falls
cash gains value over time
the amount of goods and services you can buy with a given amount of cash increases
Explain the term open economy
An open economy is an economy that trades goods and services with other countries.
Explain the term trade deficit
A country runs a trade deficit when the value of goods and services bought from foreigners is more than the value of goods and services it sells to them
Explain the term trade surplus
A country runs a trade surplus when the value of goods and services bought form foreigners is less than the value of the goods and services it sells to them.
In general we can say that countries with high investment spending relative to savings run __________, whereas countries with low investment spending relative to savings run __________.
How will Ms. Martin's tips change when a large manufacturing plant near the restaurant where she works closes?
What will happen to spending by consumers when the economy enters a downturn?
How will the price of oranges change when a late forst damages Florida's orange groves?
How will wages at a manufacturing plant change when its workforse is unionized?
What will happen to U.S. exports as the dollar becomes less expensive in terms of other currencies?
What is the relationship between a nation's unemployment rate and its inflation rate?
