Economics Definitions/Diagrams<br />Yeong-Se Chang<br />Mr. Economist<br />
Section 2 Market Failure<br />
Positive Externalities- Third Parties benefit from the production or consumption of goods and services<br />Real World Exa...
Negative Production Externalities <br />
Negative Consumption Externality<br />
Positive Production Externality<br />
Positive Consumption Externality<br />
Section 3: Macroeconomics<br />
Gross Domestic Product: is the total money value of all final goods and services produced in an economy in one year.<br />...
Per Capita GDP: is the total money value of all final goods and services produced in an economy in one year per head of th...
Inflationary Gap: is the situation where total spending is greater than the full employment level of output, thus causing ...
Deflationary Gap: is the situation where total spending is less than the full employment level of output, thus causing une...
Demand-side policies: are any government policies designed to influence AD in the economy, thus affecting the average pric...
Aggregate Supply: is the total amount of domestic goods and services supplied by business and the government, including bo...
Multiplier: is the ratio of a change in the level of national income to an initial change in one or more of the injections...
Unemployment: is a situation that exists when people who are willing and able to work cannot get a job. <br />Full Employm...
Unemployment Rate: is the number of unemployed workers expressed as a percentage of the total workforce. <br />Real World ...
Seasonal Unemployment: is unemployment that exists when people are out of work because their usual job is out of season<br...
Demand-pull Inflation: is inflation that is caused by increasing AD in an economy that shifts the AD curve to the right<br />
Cost-push Inflation: is inflation that is caused by an increase in the costs of production in an economy that shifts the S...
Deflation: is a persistent fall in the average level of prices in an economy<br />Real World Example: Deflation in Japan s...
Phillips Curve: is a curve showing the inverse relationship between the rate of unemployment and the rate of inflation, wh...
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Economics interview Semester 2

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Transcript of "Economics interview Semester 2"

  1. 1. Economics Definitions/Diagrams<br />Yeong-Se Chang<br />Mr. Economist<br />
  2. 2. Section 2 Market Failure<br />
  3. 3. Positive Externalities- Third Parties benefit from the production or consumption of goods and services<br />Real World Example: Medicine<br />Negative Externalities- Third parties bear spillover costs of the production or consumption of goods and services.<br />Real World Example: Substances like alcohol, tobacco, etc<br />
  4. 4. Negative Production Externalities <br />
  5. 5. Negative Consumption Externality<br />
  6. 6. Positive Production Externality<br />
  7. 7. Positive Consumption Externality<br />
  8. 8. Section 3: Macroeconomics<br />
  9. 9. Gross Domestic Product: is the total money value of all final goods and services produced in an economy in one year.<br />Gross National Product: is the total money value of all final goods and services produced in an economy in one year, plus net property income from abroad.<br />Nominal GDP: not adjusted for inflation<br />Real GDP: adjusted for inflation<br />
  10. 10. Per Capita GDP: is the total money value of all final goods and services produced in an economy in one year per head of the population.<br />Aggregate Demand: is the total spending in an economy consisting of consumption, investment, government expenditure and net exports<br />Consumption: is spending by households on consumer goods and services over a period of time.<br />Real world example: eating dinner outside everyday<br />
  11. 11. Inflationary Gap: is the situation where total spending is greater than the full employment level of output, thus causing inflation <br />
  12. 12. Deflationary Gap: is the situation where total spending is less than the full employment level of output, thus causing unemployment. <br />
  13. 13. Demand-side policies: are any government policies designed to influence AD in the economy, thus affecting the average price level and real national output. <br />Real World Example: Tax on income<br />Fiscal Policy: is a policy using changes in government spending and/or direct taxation to achieve economic objectives. (Increase spending on education)<br />Monetary Policy: is a policy using changes in money supply or interest rates to achieve economic objectives. (raising borrowing cost)<br />
  14. 14. Aggregate Supply: is the total amount of domestic goods and services supplied by business and the government, including both consumer goods and capital goods. <br />Supply-side policies: are government policies designed to shift the LRAS curve to the right, thus increasing potential output in the economy.<br />Real World Example: increasing subsidies<br />
  15. 15. Multiplier: is the ratio of a change in the level of national income to an initial change in one or more of the injections into the circular flow of income<br />Accelerator: is the relationship between the level of induced investment and the rate of change of national income<br />Crowding out: is the situation where the government spends more than it receives in revenue (Greece)<br />
  16. 16. Unemployment: is a situation that exists when people who are willing and able to work cannot get a job. <br />Full Employment: exists when the number of jobs available in an economy is equal to or greater than the number of the people actively seeking work.<br />Underemployment: exists when workers are carrying out jobs for which they are over-qualified, not using their full skills or part time <br />
  17. 17. Unemployment Rate: is the number of unemployed workers expressed as a percentage of the total workforce. <br />Real World Example: Korea has 3.4%<br />Structural Unemployment: is when in the long term, the pattern of demand and production methods change and there is a permanent fall in the demand for a particular type of labor.<br />Frictional Unemployment: is unemployment that exists when people have left a job and are in the process of searching<br />
  18. 18. Seasonal Unemployment: is unemployment that exists when people are out of work because their usual job is out of season<br />Real World Example: Ski Instructor in Summer.<br />Inflation: is a sustained increase in the general level of prices and a fall in the value of money<br />
  19. 19. Demand-pull Inflation: is inflation that is caused by increasing AD in an economy that shifts the AD curve to the right<br />
  20. 20. Cost-push Inflation: is inflation that is caused by an increase in the costs of production in an economy that shifts the SRAS curve to the left. <br />
  21. 21. Deflation: is a persistent fall in the average level of prices in an economy<br />Real World Example: Deflation in Japan slowing its economy.<br />
  22. 22. Phillips Curve: is a curve showing the inverse relationship between the rate of unemployment and the rate of inflation, which suggests a trade-off between inflation and unemployment (short-run). In the long run, it shows the neo-classical view that there is no trade-off between inflation and unemployment in the long run and that there exists a natural rate of unemployment that can only be affected by supply-side policies. <br />

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