02/07/2026, 19:09 Anki PDF Exporter: EC108 - Macroeconomics 1 - Term 1 (194 cards)
When is total income =
1.1 In a closed economy
total output?
What is an
2.1 A good used in production of another good, but not for consumption
intermediate good?
1. The value of final goods and services produced in the economy during a given period -
so intermediate goods don't count.
What are the 3 ways to
3.1 2. The sum of value added in the economy during a given period.
define GDP?
3. Sum of incomes in the economy during a given period. Aggregate production =
Aggregate income.
What is Nominal
4.1 The sum of thequantities of final goods produced times their current price.
GDP?
The sum of quantitiesof final good times constant (not current) prices, where the
5.1 What is real GDP?
constant is setagainst a base year.
1. The quality of products is changing over time.
What are the issues 2. New products are a headache (many new services are given for free)
6.1
with measuring GDP? 3. Measuring illegal production is difficult.
4. Home production normally excluded from GDP
What is
7.1 number of people who don’t have a jobbut has been looking for one in the last 4 weeks
unemployment?
what is the labour
8.1 sum of employment and unemployment
force?
how to find the
9.1 unemployment/labour force
unemployment rate
what is the
10.1 the ratio of the labor force to the totalpopulation of working age.
participation rate?
11.1 what is inflation the sustained rise in the general level of prices - the price level
12.1 what is deflation sustained decline in price level (negative inflation)
1. GDP Deflator = nominal GDP/real GDP
ways to measure the
13.1 2. consumer price index (CPI) - measure of cost of living (and of cost of consumption
inflation rate
basket of a typical consumer)
why are set of goods
Some of the goods in GDP are sold not toconsumers but to firms, to the government, or
produced in economy
to foreigners
14.1 NOT the same as set
Some of the goods bought byconsumers are not produced domestically but are
of goods purchased by
imported from abroad
consumers?
how does inflation
15.1 affect income poorer households hit much harder than richer households
distribution?
how are production, Changes in demand for goods lead to changes in production
16.1 income and demand Changes in production lead to changes in income
for goods linked? Changes in income lead to changes in the demand for goods
C+I+G+X-M
17.1 what makes up GDP?
consumption, investment, government spending, net exports
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what makes up
18.1 investment (fixed thesum of non-residential investment and residential investment
investment)?
what makes up the purchasesof goods and services by the state, and local governments - excludes
19.1
government spending? governmenttransfers
what is inventory
20.1 difference between production and sales
investment?
what is the total
21.1 C+I+G+X-M
demand (Z)?
the income that remains once consumers havereceived government transfers and paid
What is disposable their taxes
22.1
income?
YD = Y-T
what is the
23.1 C = c 0 + c 1Y D
consumption function?
c0 = what people would consume if theirdisposable income equals zero with c0 >
what is c0 and c1 in 0
24.1
consumption function? c1 = the marginalpropensity to consume, or the effect of an additional dollar
ofdisposable income on consumption
what are endogenous
25.1 variables depend on other variables in themodel
variables?
what are exogenous variables not explained within the model but areinstead taken as given e.g. consumption, gov
26.1
variables? spending and taxation
what is required for
27.1 equilibrium in the Y=Z (production = total demand)
goods market?
what is autonomous
28.1 part of the demand for goods that does not depend on output
spending?
1/(1-c1)
29.1 what is the multiplier
where c1 is between 0 and 1 -> gets larger the closer it gets to 1
when anincrease in autonomous spending has a more than one-for-one effect onequilibrium
what is the multiplier output
30.1
effect? This is due to increased demand -> increased production -> increased income -> future
increase in demand larger than intial increase in demand
31.1 what is private saving private saving = disposable income - consumption
taxes - government spending
32.1 what is public saving? Public saving > 0 = Budget surplus
Public saving < 0 = Budget deficit
33.1 what is total saving? total saving =private saving (households) + government saving (government)
what are 2 ways of
Demand = Production
34.1 stating equilibrium in
Investment = Savings
the goods market?
what is the marginal
35.1 propensity to save in 1 - c1
the savings equation?
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The prices of which of
the following goods
are included in both
36.1 goods bought by households
the GDP deflator and
theconsumer price
index?
37.1 what is money? used for transactions, but pays no interest
typeof loan where you lend money to an organization, like a government or company,for a set
period. In exchange, they promise to pay you back the original amount(principal) on a specific
38.1 what are bonds?
date in the future when the bond has matured, alongwith regular interest payments along the
way
what is the difference bonds pay a positive interest rate, whereas money pays no interest
39.1 between money and money can be used for transactions, but bonds cannot be used for transactions (they
bonds? are less liquid than money)
what are the 2 types of 1. currency (coins and notes)
40.1
money? 2. deposits (bank deposits on which you can write cheques)
what affects the
Your level of transactions
41.1 holding of money and
The interest rate on bonds
bonds?
how are money and
42.1 opportunity cost of holding money is interest rate from bonds
bonds linked?
43.1 what does the MD the relationship between demand for money and interestrate for a given level of income $Y
curve show?
what causes an
44.1 an increase in nominal income at given interest rate
outward shift in MD?
what is required for
45.1 equilibrium in financial MD = M S
markets? Money demanded = money supplied
what does money
46.1 demanded and money the interest rate - interest rate is where money demanded = money supplied
supplied depend on?
why is money supplied
Moneysupply is an exogenous variable so is fixed by the central bank and unaffected by the
47.1 curve a vertical
interest rate
straight line?
why is money money demanded is an endogenous variable - inverse relationship betweeninterest rates and
48.1 demanded curve quantity of money people want to hold e.g. when IR is high,higher opp. cost of holding money,
downward sloping? so people demand less money and hold more ininterest-earning assets such as bonds
49.1 what is real money? real money = money/price level
how does outward shift Given money supply, an increase in nominal income increases the interest rate
50.1 As income increases, people want to make more transactions which requires more
in MD curve occur? money, hence demand curve shifts outwards
Increase in money supply will see a shift in money supply to the right
51.1 how does MS curve There will be excess money in the economy
shift outwards? Therefore interest rate has to go down to encourage people to spend the excess money
Bonds become less attractive and new equilibrium interest rate shifts from A to A'
file:///Users/gautham/Documents/EC108 - Macroeconomics 1 - Term 1.html 3/18
When is total income =
1.1 In a closed economy
total output?
What is an
2.1 A good used in production of another good, but not for consumption
intermediate good?
1. The value of final goods and services produced in the economy during a given period -
so intermediate goods don't count.
What are the 3 ways to
3.1 2. The sum of value added in the economy during a given period.
define GDP?
3. Sum of incomes in the economy during a given period. Aggregate production =
Aggregate income.
What is Nominal
4.1 The sum of thequantities of final goods produced times their current price.
GDP?
The sum of quantitiesof final good times constant (not current) prices, where the
5.1 What is real GDP?
constant is setagainst a base year.
1. The quality of products is changing over time.
What are the issues 2. New products are a headache (many new services are given for free)
6.1
with measuring GDP? 3. Measuring illegal production is difficult.
4. Home production normally excluded from GDP
What is
7.1 number of people who don’t have a jobbut has been looking for one in the last 4 weeks
unemployment?
what is the labour
8.1 sum of employment and unemployment
force?
how to find the
9.1 unemployment/labour force
unemployment rate
what is the
10.1 the ratio of the labor force to the totalpopulation of working age.
participation rate?
11.1 what is inflation the sustained rise in the general level of prices - the price level
12.1 what is deflation sustained decline in price level (negative inflation)
1. GDP Deflator = nominal GDP/real GDP
ways to measure the
13.1 2. consumer price index (CPI) - measure of cost of living (and of cost of consumption
inflation rate
basket of a typical consumer)
why are set of goods
Some of the goods in GDP are sold not toconsumers but to firms, to the government, or
produced in economy
to foreigners
14.1 NOT the same as set
Some of the goods bought byconsumers are not produced domestically but are
of goods purchased by
imported from abroad
consumers?
how does inflation
15.1 affect income poorer households hit much harder than richer households
distribution?
how are production, Changes in demand for goods lead to changes in production
16.1 income and demand Changes in production lead to changes in income
for goods linked? Changes in income lead to changes in the demand for goods
C+I+G+X-M
17.1 what makes up GDP?
consumption, investment, government spending, net exports
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,02/07/2026, 19:09 Anki PDF Exporter: EC108 - Macroeconomics 1 - Term 1 (194 cards)
what makes up
18.1 investment (fixed thesum of non-residential investment and residential investment
investment)?
what makes up the purchasesof goods and services by the state, and local governments - excludes
19.1
government spending? governmenttransfers
what is inventory
20.1 difference between production and sales
investment?
what is the total
21.1 C+I+G+X-M
demand (Z)?
the income that remains once consumers havereceived government transfers and paid
What is disposable their taxes
22.1
income?
YD = Y-T
what is the
23.1 C = c 0 + c 1Y D
consumption function?
c0 = what people would consume if theirdisposable income equals zero with c0 >
what is c0 and c1 in 0
24.1
consumption function? c1 = the marginalpropensity to consume, or the effect of an additional dollar
ofdisposable income on consumption
what are endogenous
25.1 variables depend on other variables in themodel
variables?
what are exogenous variables not explained within the model but areinstead taken as given e.g. consumption, gov
26.1
variables? spending and taxation
what is required for
27.1 equilibrium in the Y=Z (production = total demand)
goods market?
what is autonomous
28.1 part of the demand for goods that does not depend on output
spending?
1/(1-c1)
29.1 what is the multiplier
where c1 is between 0 and 1 -> gets larger the closer it gets to 1
when anincrease in autonomous spending has a more than one-for-one effect onequilibrium
what is the multiplier output
30.1
effect? This is due to increased demand -> increased production -> increased income -> future
increase in demand larger than intial increase in demand
31.1 what is private saving private saving = disposable income - consumption
taxes - government spending
32.1 what is public saving? Public saving > 0 = Budget surplus
Public saving < 0 = Budget deficit
33.1 what is total saving? total saving =private saving (households) + government saving (government)
what are 2 ways of
Demand = Production
34.1 stating equilibrium in
Investment = Savings
the goods market?
what is the marginal
35.1 propensity to save in 1 - c1
the savings equation?
file:///Users/gautham/Documents/EC108 - Macroeconomics 1 - Term 1.html 2/18
, 02/07/2026, 19:09 Anki PDF Exporter: EC108 - Macroeconomics 1 - Term 1 (194 cards)
The prices of which of
the following goods
are included in both
36.1 goods bought by households
the GDP deflator and
theconsumer price
index?
37.1 what is money? used for transactions, but pays no interest
typeof loan where you lend money to an organization, like a government or company,for a set
period. In exchange, they promise to pay you back the original amount(principal) on a specific
38.1 what are bonds?
date in the future when the bond has matured, alongwith regular interest payments along the
way
what is the difference bonds pay a positive interest rate, whereas money pays no interest
39.1 between money and money can be used for transactions, but bonds cannot be used for transactions (they
bonds? are less liquid than money)
what are the 2 types of 1. currency (coins and notes)
40.1
money? 2. deposits (bank deposits on which you can write cheques)
what affects the
Your level of transactions
41.1 holding of money and
The interest rate on bonds
bonds?
how are money and
42.1 opportunity cost of holding money is interest rate from bonds
bonds linked?
43.1 what does the MD the relationship between demand for money and interestrate for a given level of income $Y
curve show?
what causes an
44.1 an increase in nominal income at given interest rate
outward shift in MD?
what is required for
45.1 equilibrium in financial MD = M S
markets? Money demanded = money supplied
what does money
46.1 demanded and money the interest rate - interest rate is where money demanded = money supplied
supplied depend on?
why is money supplied
Moneysupply is an exogenous variable so is fixed by the central bank and unaffected by the
47.1 curve a vertical
interest rate
straight line?
why is money money demanded is an endogenous variable - inverse relationship betweeninterest rates and
48.1 demanded curve quantity of money people want to hold e.g. when IR is high,higher opp. cost of holding money,
downward sloping? so people demand less money and hold more ininterest-earning assets such as bonds
49.1 what is real money? real money = money/price level
how does outward shift Given money supply, an increase in nominal income increases the interest rate
50.1 As income increases, people want to make more transactions which requires more
in MD curve occur? money, hence demand curve shifts outwards
Increase in money supply will see a shift in money supply to the right
51.1 how does MS curve There will be excess money in the economy
shift outwards? Therefore interest rate has to go down to encourage people to spend the excess money
Bonds become less attractive and new equilibrium interest rate shifts from A to A'
file:///Users/gautham/Documents/EC108 - Macroeconomics 1 - Term 1.html 3/18
