Give the balanced equation for each of the following. a. The combustion of ethanol (C2H5OH) forms carbon dioxide and water vapor. A combustion reaction refers to a reaction of a substance with oxygen gas. b. Aqueous solutions of lead(II) nitrate and sodium phosphate are mixed, resulting in the precipitate formation of lead(II) phosphate with aqueous sodium nitrate as the other product. c. Solid zinc reacts with aqueous HCl to form aqueous zinc chloride and hydrogen gas. d. Aqueous strontium hydroxide reacts with aqueous hydrobromic acid to produce water and aqueous strontium bromide
Econ 200 TERM Definition Factors of Production Land, labor, capital, entrepreneurship Opportunity Cost The loss of potential gain from other alternatives when one alternative is chosen Production possibilities frontier (PPF) Boundary of what can and cannot be produced Price Controls When the government establishes prices to be charged for goods and services Price Ceiling Legal maximum price that prevents prices from rising. Set below equilibrium price. Rent Control Landlords are unable to raise rent Price Floor Legal minimum price that prevents prices from falling too low. Set above equilibrium price. When too much is produced, the output 1. Destroyed is… 2. Bought by government 3. Subsidized by government Per Capita GDP or “standard of living” Economic indicator to compare countries. Measured by dividing GDP over population. Bureau of Labor Statistics (BLS) Conducts survey called “Current Population Survey,” which is a monthly household survey that collects info on employed and unemployed Working age population The total population within a set range Econ 200 of ages (i.e. 16-65) that is able to work Labor Force Consists of those employed and unemployed Employed Currently has a job Unemployed Does not have a job, but is searching for one People not in labor force Some homeless, retired, students, disability, stay at home mom/dad Labor Force Participation Rate Calculating unemployment rate Marginally Attached Worker Does not have a job and has not made effort to find a job in past month, but is willing to work Discouraged Worker Has not made an effort to find a job in past month, because they got discouraged in past attempts 3 Macroeconomic Goals 1. Economic growth 2. Stable prices (no volatile inflation) 3. Low unemployment 4 types of unemployment Fristional, structural, seasonal, cyclical Frictional unemployment Arises due to normal friction in the economy. Ex. students searching for a job Structural unemployment Comes from changes in the structure of the labor market; indicates tech innovation. Ex. a machine takes your job Seasonal unemployment Seasonal jobs. Ex. dressing as santa in Nov. and Dec. Cyclical unemployment Unemployment due to recession. Cyclical unemployment moves with the Business Cycle The Business Cycle Natural Rate of Unemployment= Frictional unemp. + Structural unemp. Zero unemployment Is bad! It causes inflation. Econ 200 Loanable Funds Market Money that is used to save and lend to borrowers for investing Types of financial intermediaries Banks, mutual funds, savings and loans, insurance companies, stocks and bonds Banks Takes deposits and make loans available Mutual Funds A company that sells stocks and bonds to other comapanies for you Insurance Companies Invest your premium in other compainies. Ex. Warren Buffett owns Geico and invests in companies, like Coca-Cola Treasury Bond Issued by U.S. government (an I.O.U.) Preferred Stockholders Stock that pays a fixed dividend Common Stock Receives profits based on ratio of shares held Retained earnings Reinvesting money into a corporation Thomas Malthus Economist during 1700s that believed a population incresase would lead to famine, but he didn’t acount for technological innovation. This is known as the Malthusian Trap. Nominal Interest Rate Amount a borrower pays a lender including interest Real Interest Rate Nominal interest – inflation Disposable Income Income – taxes Default risk Likelihood of being paid back after lending out money National Savings Public savings – Private savings Government budget surplus Increase supply of loanable funds. Real interest rate falls and quantity rises This increases investment Government budget deficit Increases demand for funds. Less investment, b/c interest rate is higher Aggregate Demand Sum of the demand for all final goods Econ 200 and services. Comprised from the componenets of GDP Aggregate Demand Curve If price level changes, we move along the curve. Things that will shift curve = consumption, investments, government. 3 reasons why the aggregate demand 1. The wealth effect curve slopes downward 2. The interest rate effect 3. The open economy effect The Wealth Effect A rise in price level lowers buying power of money and decreases quantity of real GDP demanded The Interest Rate Effect A. If price level ↑, people spend more and save less. Interest rates ↑ and real GDP ↓ B. If price level ↓, people save more and spend less. Interest rates ↓ and real GDP ↑ The Open Economy Effect A. If price level ↑ in U.S., we will import ↑ and export ↓. This means real GDP will fall. B. If price level ↓ in U.S., imports ↓, exports ↑ and real GDP demanded rises. Aggregate Supply Relationship between quantity of goods and services suppliers are willing to pay at a given price level. 2 kinds of curves Short Run Aggregate Supply (SRAS) Too short of a time period for input prices to change Econ 200 SRAS Curve 1. As prices increase, so does quantity supplied unemployment ↓ 2. As prices decrease, so does quantity supplied unemployment ↑ Long Run Aggregate Supply (LRAS) Long enough time period for input prices to change; vertical line LRAS Curve Change in price level does not change amount of real GDP supplied. Potential GDP = Real GDP Unemp. If potential GDP > Real GDP UR > Rate = Natural Rate of Unemp. NRU If potential GDP < Real GDP UR < NRU All together Anything that increases quantity/quality of a factor of production, increases both long run and short run shift in the same direction.