What is search theory?
This argues that some unemployment is frictional - for various information-related reasons, it takes time to find a new job.
How does an efficiency wage reduce adverse selection?
It improves the quality of applicants and reduces worker turnover.
How does an efficiency wage reduce moral hazard?
It reduces shirking at work and encourages harder work.
What is the difference between the Current Account and the Trade Balance?
The trade balance is equal to net exports; the current account is net exports + net factor payments + net transfers.
What are the two types of inflation expectations?
Adaptive expectations (looking backwards) and rational expectations (looking forward)
What four things can cause a shift in demand at the start of a recession?
Decrease in output demand, decrease in labour productivity, rise in input prices, fall in output prices.
What does monetary theory argue?
Deflation reduces employment by causing downward wage rigidity, increasing costs for firms and thus reducing labour demand.
Second effect described by monetary theory?
Deflation causes the real interest rate to increase, increasing saving and reducing investment.
Explain the mechanism of a multiplier.
Consumption falls --> Firm revenue falls, labour demand falls --> Unemployment rises, household income falls --> Consumption falls etc.
Explain 3 ways a market can recover to end a recession.
Inventory rebuilding, technological advances, change in expectations.
What type of policies might a government or central bank use to end a recession?
How is 'open market operations' an example of expansionary policy?
Growth in bank reserves reduces the Federal Funds rate, reducing interest rates, increasing consumption.
What is the difference between factor payments and transfer payments?
Factor payments are for assets; transfer payments are from individuals, corporations or foreign governments abroad.
What is the formula for an exchange rate?
e = (Units of foreign currency)/(1 unit of domestic currency)
What is the formula for the real exchange rate?
e x (Domestic currency price of domestic goods)/(Foreign currency price of foreign goods)
選擇要在Apple App Store上查看的Topgrade應用程序。