Economics and Monetary Policy Flashcard

Front

What you give up to obtain an item is called your:

Back

Opportunity cost

Front

The law of demand says that: An increase in price causes quantity demanded to decrease

Back

The law of demand states that as the price of a good increases, the quantity demanded decreases.

Front

The Consumer Price Index (CPI) is a measure of the overall cost of:

Back

Goods and services bought by a typical consumer

Front

If a consumer buys a television made in Japan while in Florida:

Back

Consumption increases, net exports decrease, GDP is unchanged

Front

The goal of monetary and fiscal policy is to: Enhance the shifts in aggregate demand to create output fluctuations, Offset the shifts in aggregate demand to eliminate unemployment, Enhance the shifts in aggregate demand to increase growth, Offset the shifts in aggregate demand to stabilize the economy

Back

Offset the shifts in aggregate demand to stabilize the economy

Front

One acknowledged problem with the CPI is that it:

Back

Fails to account for improvements in quality

Front

Unemployment that results because it takes time for workers to search for jobs that match their skills is called:

Back

Frictional unemployment

Front

The overriding reason households and societies face many decisions is because:

Back

Resources are scarce

Front

The money multiplier is equal to:

Back

1 divided by the reserve ratio

Front

If aggregate demand shifts left, then in the short run:

Back

the price and real GDP both fall