Powerpoint stuff for mid term

Question 1

what was the market mechanism called before?

Answer 1

invisible hand

Question 2

what does it mean to be capital intensive?

Answer 2

Capital is abundant and relatively low-cost.

Question 3

what does it mean to be labor intensive?

Answer 3

Capital is unavailable or very expensive

Question 4

what is the relative size of the U.S. economy?

Answer 4

United States produces about $15 trillion of output per year.

Question 5

what are some factors that set demand behavior?

Answer 5

Taste for the good increases.
Income increases.
Price of a substitute rises.
Price of a complement falls.
Future prices are expected to rise.
Number of buyers increases.

Question 6

what are some factors that set supply behavior?

Answer 6

Technology
Factor Costs.
Taxes and subsidies.
Expectations. 
Other goods.
Number of sellers.

Question 7

what are some positive externalities?

Answer 7

Society’s benefit > market benefit.
The market underproduces.
The government subsidizes to shift demand right.

Question 8

what are some negative externalities?

Answer 8

Society’s cost > market cost.
The market overproduces.
The government restricts production to shift supply left.

Question 9

what are intermediate goods?

Answer 9

goods or services purchased for use as an input in the production of final goods or in services.

Question 10

what is value added?

Answer 10

the increase in the market value of a product that takes place at each stage of production.

Question 11

what is nominal GDP

Answer 11

as measured with the effects of price changes included.

Question 12

what is real GDP

Answer 12

the effects of price changes have been removed.

Question 13

what is aggregate income in an economy?

Answer 13

total amount of income received by all factors of production in an economy in a given period.

Question 14

what is aggregate output in an economy?

Answer 14

total amount of output produced and supplied in the economy in a given period

Question 15

who makes up the labor force?

Answer 15

all persons age 16 and over who are either employed or actively seeking work.

Question 16

who is out of the labor force?

Answer 16

those not working and not actively seeking employment.

Question 17

Nominal income and real income difference?

Answer 17

You may get a raise (nominal income increases) – but if it does not rise as fast as inflation, your purchasing power decreases (real income falls).

Question 18

what is demand-pull inflation?

Answer 18

results from excessive pressure to buy on the demand side of the economy.

Question 19

what is cost push inflation?

Answer 19

results from higher production costs putting pressure on suppliers to push up prices.

Question 20

Real income is measured in what?

Answer 20

constant dollars

Question 21

nominal income is measured in what?

Answer 21

current dollars

Question 22

Nominal GDP refers to what?

Answer 22

current dollar value of ouput

Question 23

Real GDP refers to what?

Answer 23

inflation adjusted value of output

Question 24

relative price?

Answer 24

price of one good in comparison with prices of other goods. Apples price may rise but oranges dont

Question 25

average price vs relative price

Answer 25

relative price is on individual goods. avergae price of fruit can stay the same if the relative price of apples increases as long as the relative price of say oranges decreases

Question 26

what is the consumer price index?

Answer 26

a mechanism for measuring the changes in the average price of consumer goods and services

Question 27

trough

Answer 27

phase of the business cycle when the economy is at its lowest growth