Normal goods
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-Goods are for which demand goes up when income is higher and for
which demand goes down when income is lower
-Most goods are normal goods
-Ex: a new car
Unemployment Rate Equation
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Unemployment Rate= unemployed/(employed+unemployed)
,Efficiency
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An efficient economy is one that produces what people want at the least
possible cost
The Three Basic Questions
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1) What gets produced
2) How is it produced
3) Who gets what is produced
Cyclical Unemployment
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-Unemployment that is above frictional plus structural unemployment
-Avoidable
-Increase in unemployment during recession; decrease in unemployment
during boom
Fiscal Policy
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, -Government policies concerning taxes and spending
-Expansioning fiscal policy- cut tax and increase spending
-Contracting fiscal period- raise tax, cut spending
Treasury bonds, notes and bills
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Promissory notes issued by the federal government when it borrows
money
Deflation
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A decrease in the overall price level
Four Criteria in Judging Economic Outcomes
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1) Efficiency
2) Equity
3) Growth
4) Stability
, Hyperinflation
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-A period of very rapid increases in the overall price level
-US has never experienced this
-Over 50%
Current Dollars
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The current prices that we pay for goods and services
Weight
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The importance attached to an item within a group of itmes
Ceteris Paribus (all else equal)
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-Goods are for which demand goes up when income is higher and for
which demand goes down when income is lower
-Most goods are normal goods
-Ex: a new car
Unemployment Rate Equation
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Unemployment Rate= unemployed/(employed+unemployed)
,Efficiency
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An efficient economy is one that produces what people want at the least
possible cost
The Three Basic Questions
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1) What gets produced
2) How is it produced
3) Who gets what is produced
Cyclical Unemployment
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-Unemployment that is above frictional plus structural unemployment
-Avoidable
-Increase in unemployment during recession; decrease in unemployment
during boom
Fiscal Policy
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, -Government policies concerning taxes and spending
-Expansioning fiscal policy- cut tax and increase spending
-Contracting fiscal period- raise tax, cut spending
Treasury bonds, notes and bills
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Promissory notes issued by the federal government when it borrows
money
Deflation
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A decrease in the overall price level
Four Criteria in Judging Economic Outcomes
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1) Efficiency
2) Equity
3) Growth
4) Stability
, Hyperinflation
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-A period of very rapid increases in the overall price level
-US has never experienced this
-Over 50%
Current Dollars
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The current prices that we pay for goods and services
Weight
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The importance attached to an item within a group of itmes
Ceteris Paribus (all else equal)
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