It is inflation caused by consumption spending; too many dollars chasing not enough products
It is inflation caused by rising production costs
It is inflation in excess of 50% a year; usually precedes an economic collapse
It is income received as WRIP
It is income adjusted for inflation
They are most hurt by inflation
creditors, fixed-income receivers,savers
They actually benefit from inflation
flexible-income receivers, debtors
It is the formula for calculating the real interest rate
nominal rate - inflation rate
It is inflation during a recession; it is very unusual but arose during the late 1970s
stagflation (stagnant economy + inflation)
It is the formula for the spending multiplier.
It is the formula for the tax multiplier
It is always the value of the balanced budget multiplier
1 When an increase in spending is matched by an equal increase in taxes, the value of the increase is the amount of the government spending increase, because the multiplied effect is offset by the tax multiplier.)
It is the practical significance of the spending multiplier
Relatively small changes in spending are magnified into larger changes in GDP
The are the determinants of aggregate demand.
Consumption, Investment, Government Spending, and Net Exports
Give three examples of injections into the circular flow of the economy.
exports, government spending, investment spending
Give three examples of leakages from the circular flow of the economy
taxes, imports, savings
It is the formula for determining the real interest rate.
the ability to produce more of a good than another country
the ability to produce a good at a lower opportunity cost than another country
increase in the value of a currency relative to another currency
decrease in the value of a currency relative to another currency
WEAK dollar > EXPORT more >move to a trade SURPLUS
STRONG dollar > IMPORT more > move to a trade DEFICIT
sale of products in a foreign country at prices either below costs or below prices at home
rates at which currencies trade for one another
all impediments other than protective tariffs that nations establish to impede imports, including quotas, licensing requirements, unreasonable product quality standards, etc.
North American Free Trade Agreement
1993 agreement establishing a free trade zone composed of Canada, Mexico, and the US
practice of shifting work previously done by American workers to workers located in other nations
Smoot-Hawley Tariff Act
legislation passed in 1930 that established very high US tariffs designed to reduce imports and stimulate the domestic economy. Instead, the law only resulted in retaliatory tariffs by other nations and decline in trade worldwide.
taxes imposed by a nation on imported goods
terms of trade
rate at which units by one product can be exchanged for units of another product
group of nations that lower or abolish trade barriers among themselves
World Trade Organization
organization of 153 nations that overses the provisions of the current world trade agreement, resolves disputes stemming from it, and hold forums for further rounds of trade negotiations
in the balance of trade accounting system, this includes imports and exports of goods and services, investment income, and transfers.
in the balance of trade accounting system, this includes real and financial assets
in the balance of trade accounting system, the central bank holds reserves of foreign currencies to offset deficits and surpluses