MacroEconomics Ch1

  1. Macroeconomics Objectives
    • Full Employment
    • Non-inflationary economy
    • Economic growth
  2. Macroeconomic Policies to achieve objectives
    • Fiscal Policy
    • Monetary Policy
  3. Full Employment
    When the economy is producing to its maximum sustainable capacity; using labor, technology, land, capital and other factors of productions to their fullest potential.
  4. Non inflationary economy
    An economy with stable prices. not inflationary or deflationary.
  5. Economic Growth
    a measure of the rate of change that a nation's gross domestic product goes through from one year to another.
  6. Fiscal Policy
    Is federal taxation and spending policies designed to level out the business cycle and achieve full employment, price stability and sustained growth in economy.
  7. Monetary Policy
    The Federal Reserve System (the FED) is influencing the cost and availability of credit keeping the objectives in mind. The FED regulates both interest rates and the nation's Money Supply.
  8. Technical Efficiency in Production
    Producing the maximum output with the given input.
  9. Allocation Efficiency
    The study of the allocation of resources in a society.
  10. Problem Questions in Allocation Efficiency
    • What to Produce
    • How to Produce (by what method)
    • For Whom to Produce
    • When to Produce
  11. CPI
    Consumer Price Index is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same area (city, region, or nation).
  12. GDP
    Gross Domestic Product-The value of all finished goods and services produced domestically in a given time period.
  13. Federal Fund Rate
    The rate that banks charge each other for overnight borrowing.
  14. Discount Rate
    The rate the Federal Reserve charges member banks for borrowing.
  15. What has occured when the Federal Fund is increased?
    It did not take long for the US economy to slow.
  16. CCI
    Consumer Confidence Index is a monthly report detailing consumer attitudes and buying intentions, with data available by age, income and region.
  17. How many households are involved in the CCI survey?
  18. What is the US budget Deficit?
    $1.4 trillion during the fiscal year 2009.
  19. What is the source of increase in poverty level in the US?
    lack of education
  20. Opportunity Cost
    The cost of the best alternative forgone
  21. Economics
    A social science that identifies ways to allocate LIMITED RESOURCES to produce desired goods and services in order to satisfy people's unlimited wants. It is the science of scarcity.
  22. Fallacy of Composition
    • The belief that what is true for the part is necessarily true for a whole.
    • The belief that what is true for the whole is necessarily true for the part.
  23. Paradox of Thrift
    a penny saved is a job lost....when society as a whole saves more, the result is a drop in the income but no increased savings.

    • total incomeD = consumptionD + savingU
    • less goods sold...less profit...more layoffs....less income=less consumption
  24. Positive Economics
    Strives to explain what exists and how it works. No bias only Facts.
  25. Normative Economics
    Looks at the outcomes of economic behavior and asks if they are good or bad, and whether they can be made better.
  26. The Post Hoc Fallacy
    Causation Vs. Correlation - If Event A happens before Event B, then it is true that Event A caused Event B.
  27. Why should you study economics?
    To be a better VOTER
  28. In the year 2000, which tax collected was highest in Oregon?
    Income tax
Card Set
MacroEconomics Ch1
What Economics Is About