Podcast
Questions and Answers
Which of the following is NOT one of the three functions of money?
Which of the following is NOT one of the three functions of money?
- Medium of exchange
- Producer of goods (correct)
- Unit of account
- Store of value
What does Okun’s Law illustrate?
What does Okun’s Law illustrate?
- The neutral impact of unemployment on economic growth
- The negative relationship between GDP growth and unemployment (correct)
- The direct relationship between wages and consumer spending
- The positive correlation between GDP growth and inflation
What is the primary goal of fiscal policy?
What is the primary goal of fiscal policy?
- To control interest rates set by the central bank
- To establish trade agreements with other countries
- To adjust government spending and taxation to stabilize the economy (correct)
- To regulate the supply of money in the economy
How does comparative advantage affect international trade?
How does comparative advantage affect international trade?
During which economic condition might a government choose to reduce spending as part of its fiscal policy?
During which economic condition might a government choose to reduce spending as part of its fiscal policy?
What are the three main components of the seller's problem?
What are the three main components of the seller's problem?
What does marginal cost represent in production?
What does marginal cost represent in production?
How is GDP per worker calculated?
How is GDP per worker calculated?
Which type of unemployment is characterized by workers being between jobs?
Which type of unemployment is characterized by workers being between jobs?
What does the natural rate of unemployment include?
What does the natural rate of unemployment include?
What is one important role of financial intermediaries?
What is one important role of financial intermediaries?
What does the rewards of doing business refer to in a seller's perspective?
What does the rewards of doing business refer to in a seller's perspective?
Why is the marginal cost significant for firms in production decision-making?
Why is the marginal cost significant for firms in production decision-making?
Flashcards
Comparative Advantage
Comparative Advantage
The ability of a country to produce a good or service at a lower opportunity cost than another country.
Okun's Law
Okun's Law
A relationship between economic growth and unemployment. When GDP grows, unemployment falls, as more jobs are created.
Medium of exchange
Medium of exchange
A good or service that is used to buy other goods or services.
Fiscal Policy
Fiscal Policy
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Unit of account
Unit of account
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What is marginal cost?
What is marginal cost?
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What does "GDP per worker" measure?
What does "GDP per worker" measure?
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What is Frictional Unemployment?
What is Frictional Unemployment?
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What is the natural rate of unemployment?
What is the natural rate of unemployment?
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What are the three main components of the seller's problem?
What are the three main components of the seller's problem?
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What role do financial intermediaries play in credit markets?
What role do financial intermediaries play in credit markets?
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Study Notes
Chapter 6: Sellers and Incentives
- Seller's problem involves three main components: making goods, cost of doing business, and rewards of doing business.
- Making goods refers to how inputs are transformed into outputs.
- Cost of doing business includes understanding fixed and variable costs.
- Rewards of doing business relate to revenue and profit maximization.
- These factors influence decision-making.
Chapter 19: The Wealth of Nations
- (Question 3 and 4 were answered correctly).
Chapter 20: Aggregate Incomes
- (Question 5 was answered correctly).
- Calculating GDP per worker involves dividing total GDP by the number of employed workers.
- GDP per worker measures average output per worker, reflecting productivity and economic performance comparisons.
Chapter 23: Employment and Unemployment
- Frictional unemployment is related to job searching and transitions between jobs; it is a natural and temporary form of unemployment.
- The natural rate of unemployment represents an equilibrium state encompassing frictional and structural unemployment, excluding cyclical unemployment.
Chapter 24: Credit Markets
- Financial intermediaries, such as banks, reduce transaction costs.
- They match savers with borrowers, manage risks, and provide liquidity for efficient credit market operation.
Chapter 25: The Monetary System
- Money has three functions: medium of exchange, store of value, and unit of account.
Chapter 26: Short-Run Fluctuations
- Okun's Law demonstrates a negative correlation between GDP growth and unemployment.
- GDP growth tends to be associated with a decrease in unemployment, as job creation increases.
Chapter 27: Countercyclical Macroeconomic Policy
- Fiscal policy involves adjusting government spending and taxation to stabilize the economy.
- Increasing spending or decreasing taxes stimulates demand during recessions, while the opposite actions reduce demand during inflation.
Chapter 28: Macroeconomics and International Trade
- Comparative advantage means a country produces goods at a lower opportunity cost than other countries.
- This principle fuels international trade, enabling specialization and efficient exchange.
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