ECON1A REVIEWER PRELIMS (BF-2Y2-1)

INTRODUCTION
1. Is a big branch of economics that studies the behavior of the aggregate economy or the
economy as a whole
2. As a separate field of study, it became popular with the publication of the book_____________ of
_________ in 1936
3. The groups interacting in an industry (2)
4. Refer to consumer
5. Refer to producers
6. The total output produced
7. Are needed to produce output
8. Are in the form of savings, taxes and imports
9. Are in the form of investment, government purchases and exports
10.Makes investment
11.Makes government purchases
12.Do export and imports
13.2 stabilization policies
14.Instrument used by monetary policy
15.Instrument used by fiscal policy
16.The capital market is guided by the ______ which makes use of _______and________ to stabilize
the economy
17.The monetary authority
18.The government sector is guided by the ______ which makes use of _____and______ to stabilize
the economy
19.Does import hence there is need for dollars to pay for this
20.Is a form of leakage in the economy because it will mean a surplus of locally produced goods
hence a decrease in the GDP
21.The foreign sector is guided by its _________
22.4 sectors in the economy
23.Demand for the 4 sectors in the economy
24.3 forms of leakage
25.3 forms of injection
26.An _______ in investment leads to an increase in employment hence an _______ in GDP
27.An ________ in taxes decreases disposable income
28.A ______ in disposable income decreases consumption hence _______ in GDP
29.An increase in exports ________ the GDP
30.An _________in imports leads to reduction in GDP
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31.Depicts the behavior of the aggregate economy demonstrating how the national income
behaves when there are changes in the different variables in the economy
32.2 opposing school of thought in economics which may determine action in the economy in the
endeavor to attain growth and development
33.Classical economics
34.Keynesian economics
35.Had been considered the father of economics
36.Brought the effective birth of economics as a separate discipline
37.Prior to the world great depression in the 1930s, the view of ______ prevailed
38.The ideal economy is self regulating, hence the best thing the government can do to help the
economy was to keep its hands off (no government interventions)
39.He describes the market mechanisms as an invisible hand that guides the economy to attain an
equilibrium and at the same time full employment level
40.Contended that aggregate demand for goods might be insufficient during economic downturns,
leading to unnecessarily high unemployment and losses of potential output

41.He therefore advocated active policy responses by the public sector including monetary policy
actions by the central bank and fiscal policy actions by the government to stabilize output over
the business cycle
42.Conclusion of ______ is that, no strong automatic mechanism moves output and employment
towards full employment levels hence the government needs to redirect the economy through
its government policies
43.As a measure of economys performance
44.Measures the total market value of the final goods and service produced in the economy in a
given period of time
45.Measures the market value because the quantity of output produced cant be added, instead
the value of production is obtained in terms of prices in the market
46.Counts only final goods and services produced in the economy
47.Are excluded from GDP computation in order to avoid double counting
48.Measures production in a given period of time
49.Measures the market value of final goods and services produced in the economy at price
prevailing in that period
50.Measures the market value of produced output in the economy at price with base period
51.Is the consumer price index
52.Is better measure in determining economys performance because its changes are due to an
increase in production in the economy not by change in prices
53.The amount of goods and services produced per person
54.Is often used as a measurement of welfare and used as a basis for classifying poor countries
and rich countries
55.3 approaches in estimating gross domestic product
56.Is the sum of all types of expenditures on final goods and services from the four sectors in the
economy: ousehokd, businessm government and the foreign sector
57.The expenditures represent almost all purchase by households of durable consumer goods, non
durable consumer goods and consumer expenditures for services
58.Capital formation
59.2 primary components of investment
60.Breeding stock and orchard development
61.Excluded from government expenditures
62.The difference between exports and imports of goods and services
63.Are subtracted from exports to arrive at net effect of foreign trade on GDP
64.If import ______exports , net exports will be negative, decreasing GDP
65.Is the sum of all the income payments derived from the four factors of production from land
labor capital And entrepreneur such as the rent wages interest and normal profit
66.4 components of national income
67.Include wages and salaries paid to employees ; also include wage and salary supplements
payments by employer into social insurance and into a variety of private pension health and
welfare funds for workers
68.Consists of income received by the households and business that supply property resources
69.Consists of money paid by private business to the suppliers of money capital
70.It is the sum of proprietors income and corporate profits
71.Consists of the net income of sole proprietorships, partnerships and other unicorporated
businesses
72.Are the earnings of owners of corporations
73.3 classifications of corporate profits
74.3 factors to be added to national income
75.Are taxes on the sales of goods and services
76.This also includes the value added tax
77.It is also called capital consumption allowance or consumption of fixed capital
78.It is defined as the cost of the used capital goods in a given period of time
79.Formula of depreciation
80.Formula of real GDP
81.Formula of per capita RGDP

82.Is used to be the net factor income from abroad

83.This is the difference between the aggregate flow of factor payments from the rest of the world
84.Consists of receipts from the use of the economys resources from the rest of the world like
salary remittances of Filipino working abroad
85.Consists of payment for the economys use of foreign investment in the Philippines
86.This approach reflects sectoral contributions to economic activities
87.It is derived by adding together the gross value added originating in various industry
88.Includes only goods and services produced by a nations own citizens and firms
89.Goods and services produced outside a nations boundaries by the nations own citizens and
firms
90.Goods and services produced within a nations boundaries by foreign citizens and firms
91.Is simply GDP adjusted for depreciation of capital which economy used
92.Measures the market value of the total output produced in economy
93.Measures output produced in its factor cost
94.Is the total of all income earned by factor of production
95.It is the sum of wages, rent, interest, and profit earned by the suppliers of labor land capital and
entrepreneur
96.Is national income less income not received by the individual such as the undistributed
corporate profit and corporation income tax and sss/gsis contribution but add the income that is
received but not earned like transfer payments
97.Can be derived by subtracting personal taxes from personal income
98.The amount that households have for personal consumption and saving
99.Formula of GNI
1. Formula of NDP
2. Formula of NY
3. Formula of PY
4. Formula of PDY
5. Productive non market activities that are not included in the GDP (3)
6. This include activities in the informal sector of the economy which do not pay taxes like the
sidewalk vendors, the jeepney and tricycle drivers
7. Expenditures excluded from GDP (4)
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8. Provide the means for people to enjoy better living standards and for more of us to find work
9. Is best defined as a long term expansion of the productive potential of the economy
10.Should lead to higher real living standards and rising employment
11.Is measured by the annual percentage change in real GDP
12. (4) Benefits from a growing economy
13.Growth is measured by an increase in per capita real GDP
14.As the economy grows it stimulates employment, thus, giving income for the individuals that
may lead to a rise in the standard of living
15.Growth has a positive effect on government revenues: boosting tax revenues and providing the
government with extra money to finance government expenditures
16.Rising demand and output encourages investment in new capital this helps to sustain growth in
the economy
17.Economic growth normally has a positive impact on the companys profits and business
confidence
18.Cost of growth in the economy (2)
19.Fluctuations in economic activities (4)
20.The persistent underlying movement that takes place in the economy over a period of time
21.It can be growth or a decline
22.Is a linear one, it may grow at more or less constant rate over the years
23.These are the changes that occur in a more or less regular pattern from year to year
24.These are changes in economic activity due to exogenous factors such as drought flood poll and
other disturbances

25.The alternating periods of expansion and contraction that do not occur in a regular time interval
and do not last at the same period
26.4 phases of business cycle
27.It is characterized by full employment and the national output is close to full capacity
28.The price level is likely to be rising during this phase
29.It occurs when output and employment both decline while prices tend to be inflexible
30.The economy at this phase is experiencing a contractionary economic activity at this cycle is
severe and prolonged
31.This is the recovery phase of the business cycle
32.The economys level of output and employment expand toward full employment
33.A condition in the economy where a significant number in the labor force more than 4% are out
of work
34.It is a situation in the economy whereby for one reason or another available resources are not
fully used for productive purposes
35.One who is looking or seeking for a job but cannot find any
36.Is one who has the job but is not employed efficiently
37.3 types of unemployment
38.Use the term _________consisting of search unemployment and wait unemployment for workers
who are either searching for jobs or waiting to take jobs in the near future
39.Implies that the labor market does not operate faultlessly and instantaneously in matching
workers and jobs
40.Is a temporary unemployment associated with the changes in the economy
41.Reasons in frictional unemployment
42.This type of unemployment is associated with the mismatch of jobs and workers due to lack of
skills or simply the wrong area desired for work
43.Economist use ________ in the sense of compositional
44.Changes over time in consumer demand and in technology alter the structure of the total
demand for labor both occupationally and geographically
45.Unemployment results because the composition of the labor force does not respond
immediately or completely to the new structure of job opportunities
46.This is an unemployment caused by the recession phase of the business cycle
47.An economy that is in recession faces higher levels of unemployment
48.When this happens there are more unemployed workers than job openings due to the
breakdown of the economy
49.This type of unemployment is heavily concentrated on the activity of the economy due to the
inadequate total spending
50.It is a very serious problem when it occurs
51.Cost of unemployment (2)
52.The existence of unemployment implies that the nation is not using its scarce resources as
effectively as possible
53.This is reflected in the opportunity cost of unemployed resources, which is the loss of all the
goods and services that these resources could be producing if they were employed
54.Unemployed workers lose the income, respect, and self esteem they would enjoy had they been
working
55.Increases poverty, heightens racial and ethnic tensions and reduces hope for material
advancement
56.Okuns law developed by
57.Which states the relationship between real GDP and unemployment
58.He concluded that for every 2-3% increase in RGDP above trend, unemployment declines 1%
point
59.Is one of the goals in the economy, the failure to attain it may mean a problem of inflation or
deflation
60.Is a sustained or continuous rise in the general price level
61.Is a decrease in the general price level
62.Causes of inflation (2)

63.Is in the form of consumption, investment, government expenditures and exports

64. Occurs when the level of spreading in the economy exceeds the amount , firms are capable of
producing
65.Pulls the general price level upward
66.Is the term used when cost of production increases especially associated with increase in
energy gasoline and even an increase in wages
67.It is inflation from the supply side
68.Effects of inflation (3)
69.When inflation is so high that prices are doubled or tripled for a period of time
70.Refers to a period of extremely high inflation reaching 100,000% and above
71.It can lead to the abandonment of the use of the countrys currency, leading to the
inefficiencies of barter
72.Which means expenses for education, food, health and recreation
73.Protection against inflation (2)
74.Is the percentage rate of change of a price index over time
75.Formula of inflation rate
76.Is a price index that compares present prices commonly purchased goods and services as
defined in the Family Income Expenditures Survey of the NSO to the prices of similar goods and
services in a base period
77.Is used as a deflator for Nominal or current GDP
78.It is also the same deflator used for nominal income of the person
79.Is the money income received from wages rent interest or normal profits
80.Is the measure of the amount of goods and services nominal income can buy
81.It is the purchasing power of nominal income or income adjusted for inflation that will decrease
82.Formula of real income
83.Is an inflation whose full extent was not expected
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