MACROECONONICS MID-TERM EXAM/R.ZIEGLER Part I Matching __1. Production Possibilities Frontier __2. Opportunity Cost __3. Equilibrium Price and Quantity __4. Circular Flow __5. Net Taxes __6. Leakages __7. Injections __8. Law of Diminishing Marginal Returns __9. Full Employment __10. Economic Growth __11. Economic Development __12. Real Flow __13. Structural Unemployment __14. Cyclical Unemployment __15. Frictional Unemployment __16. Underemployment __17. Change in Demand/Supply __18. Disinflation __19. Stagflation __20. Invisible Hand __21. Laissez Faire __22. Economic Role of Government __23. Economic Functions of Government __24. Real GDP __25. Nominal GDP __26. Change in Quantity Demanded/Supplied Answers to Matching I A. exemplified by conditions from the middle seventies, it denotes a period of high inflation simultaneous with a recession. B. alleges that continued investment produces reduced returns. C. Total Taxes less Transfer Payments D. plots the opportunity cost of production decisions. E. amounts to approximately five percent and is equal to full employment in theory. F. a period of lower inflation than previously experienced. G. such factors which create disequilibrium in the circular flow model as imports, net taxes, and savings. H. such factors which create disequilibrium in the circular flow model as exports, investments, and government expenditures. I. supposed to be about 5 % unemployment, it represents primarily fricitonal unemployment. J. Adam Smith's term for market forces. K. that portion of idled workforce attributable to a contraction in the business cycle. L. value of the goods and services produced in an economy after adjustment for inflation. M. additional output at existing technological levels. N. stable economic growth, regulation of markets, redistribution of wealth. O. attributable to a change in price effecting demand and causing movement along the curve. P. attributable to a change in taste of consumers causing movement of the curve. Q. taxing, spending, regulation. R. economic activity which results out of technological advance. S. the dollar figure of the value of goods and services produced by an economy. T. Adam Smith is usually associated with this term meaning that the government should be as little involved in the economy as possible. U. results from a mismatch of skills necessary for employment and those of potential workers. V. what must be foregone or given up to produce something else. W. the point toward which market forces are driving the economy, and appears on the supply and demand graph as the point of intersection of the supply and demand curves. X. model which attempts to graphically display the major forces of the economy. Y. occurs with persons engaged in employment for which the skills they have exceed the needs. Z. on the circular flow model, this is represented by the designated arrows of the factors of production and the goods and services consumed. Part II Matching __1. Public Goods __2. Marginal Propensity to Consume __3. Disequilibrium __4. Socialism __5. Capitalism __6. Supply Side Economics __7. Corporatism __8. Collectivism __9. Dynamic Law of Supply and Demand __10. Consumption Function __11. Productivity __12. Market Failure __13. Demand __14. Monad __15. Phillips Curve __16. Laffer Curve __17. CPI __18. Expected Rate of Profit __19. Alfred Chandler __20. Corporation __21. Limited Life __22. Limited Liability __23. Social Surplus __24. Public Sector Complex __25. Transfer Payments __26. Marginal Tax Rate Answers to Matching II A. the economic model of fascism, based on national councils of government, business, and labor which control industries, including answers to all the basic economic questions, and is one of the reasons that it is incorrect to say that there is actually private property in such systems. B. originally postulated to show an inverse relationship between unemployment and inflation rates. C. In the Visible Hand, set forth the thesis that it is middle management that really controls corporate America. D. Contrasts with the static rule by taking into account the elasticity of price and response of demand to it. E. Change in expenditure divided by change in disposable income. F. the official governmental measure of the rate of inflation. G. actual consumption. H. examples would include social security, unemployment, and subsidies to farms and business. I. depicts the inverse relationship which can occur between tax rates and revenue collection. J. increase output per unit of input. K. the form of business organization which makes possible greater economies of scale because of the favorability of potential for capital accumulation. L. began to accelerate in growth following the Great Society programs of LBJ in the 1960's. M. characteristic of corporations which holds stockholders accountable for only the value of their stock. N. provided by government at public expense, the use of them by one person hypothetically does not reduce their use and availability to others. O. a characteristic of both sole proprietorships and partnerships. P. determines amount of tax on additional income. Q. the 'profit' of an economy, the level of which has much to do with determining investment levels. R. any of a number of collectivist economic programs which include collective ownership or control of the means of production and the determination of answers to the basic economic questions, and which usually want to redistribute wealth more equally. S. market outcome judged to be inadequate. unacceptable, or 'unfair' in relation to some purported goal of society. T. an economic system in which free markets and private enterprise and private control of the factors of production are the rule. U. a state in which countering forces are not in balance, so that there is a tendency for change to result. V. a broader and more useful term for any of the forms of group control over the economy, including socialism, communism, social democracy, and corporatism and fascism. W. school of economic thought which advocates reduction of government taxation and regulation, and pro-active support, of market forces to promote production and economic growth and development. X. as income rises, consumption rises, though not as quickly. Y. anticipated profit over value of investment. Z. in Liebniz, this represents the 'discrete particular' disassociated from its field of reference, and thereby suffering from anomie. Part III Matching __1. GDP Gap __2. Business Cycle __3. C + I + G + Xn __4. Factors of Production __5. DPI __6. Discretionary Income __7. Autonomous Consumption __8. Induced Consumption __9. Permanent Income Hypothesis __10. Fiscal Year __11. GDP Deflator __12. Misery Index __13. Full Employment GDP __14. Keynesian Economics __15. Aggregate Demand __16. Dissavings __17. Capital Goods __18. Externalities __19. Alienation __20. Anomie __21. Keynesian Cross __22. Regressive Tax __23. Progressive Tax __24. Consumption Tax __25. Unemployment Rate __26. Rational Expectations Answers to Matching III A. Combines the unemployment rate and the rate of inflation. B. Property Taxes and Social Security Taxes are examples of this. C. expansion, peak, contraction, trough D. land, labor, capital, and entrepreneurship. E. in Liebniz theory of the monad, this is the psychological state that leads to alienation. F. governmental budget year. G. the difference between actual output and potential output. H. that part of income for which real choices as to consumption and investment are possible. I. the fundamental concern in Keynesian economics is to raise the level of this. J. additional consumption attributable to an increase of income. K. on the Keynesian cross curve, this is the aggregate amount of consumption above disposable income. L. plots expenditures for consumption against disposable income changes about a bisecting line which shows savings and dissavings. M. in Marxian analysis, this results from over-specialization and the expropriation of surplus value and detachment feom the productive process, dependent on what stage of Marx's analysis you look at. N. goods the function of which is the production of consumer goods and services. O. from Milton Friedman, this holds that additional income will be treated by a recepient in the same way as previous income was. P. suggests that people act as if they will continue to see the same kind of economic conditions as they have recently experienced. Q. is calculated by dividing the number of unemployed persons by the workforce. R. Japanese tax rates appear higher than ours but are not because they only tax expenditures and not savings. S. method for adjusting nominal value of goods and services produced to reflect the rate of inflation. T. somewhat like 'take home pay,' it is the income available for paying the costs of living. U. what the value of goods and services produced would be if there was only frictional unemployment. V. major concern is governmental policy to close the GDP gap by increasing government expenditure W. cost and benefit results of productive process which affect those not immediately involved in that process. X. one of the ways to estimate GDP, and which suggests one of the problems with Keynesian analysis in that it clearly shows that increasing governmental expenditure, which must come out of consumption or investment, will not do quite what Keynes suggested it would. Y. the federal graduated income tax is perhaps the best example of this which places higher tax rates on higher income levels. Z. an amount of expenditure required for subsistence even given no income. 71-78 A 63-70 B 55-62 C 47-54 D