ALl Macro

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Economics - Macroeconomics

andrsonztdc Created by 10 mon ago

Cards in this deck(74)

the number of people with an income level below a predefined 'poverty line', which is the minimum income necessary to satisfy basic physical needs.

the total amount of real output (goods and services) that all buyers in an economy (consumers, firms, government and foreigners) are willing and able to buy at different possible price levels, in a year, ceteris paribus.

the total amount of real output (goods and services) produced in an economy in a year at different price levels; there are three kinds of AS curves: short-run aggregate supply (SRAS), long-run aggregate supply (LRAS) and Keynesian AS.

features in the economy that limit economic fluctuations (recessionary and inflationary gaps) without any government action, thus stabilizing the economy; the most important are progressive income taxes and unemployment benefits.

government revenues are equal to government spending, over the period of a year.

government revenues < government spending, over the period of a year, usually made possible by government borrowing.

government revenues> government spending, over the period of a year

a measure of the degree of optimism of firms regarding the future of the economy.

short-term fluctuations (increases and decreases) in real GDP over lime, consisting of four phases: peak, contraction, trough, and expansion.

spending by the government on public investments (roads, airports, public hospitals and schools, etc)

a financial institution concerned with carrying out monetary policy and exchange rate policy, as well as regulating commercial banks and acting as banker to both commercial banks and the government

of the degree of optimism of consumers regarding the future of the economy

spending by consumers to buy goods and services

policy carried out by the government (fiscal policy) or the central bank (monetary policy) intended to lower AD and close an inflationary gap.

inflation caused by a decrease in SRAS, hence a leftward shift in the SRAS curve, resulting mainly from increases in costs of production or supply shocks.

a possible weakness of expansionary fiscal policy involving increases in government spending financed by borrowing, causing an increase in interest rates that reduces consumption and investment spending, thus counteracting the increase in AD.

spending by the government for its day-to-day operations (wages of government workers, supplies, subsidies)

(demand-deficient unemployment) = unemployment caused by decreases in AD, leading to the downward phase of the business cycle.

a sustained decrease in the general price level

occurs when short-run equilibrium GDP is less than potential GDP due to insufficient aggregate demand.

inflation caused by an increase in AD, hence a rightward shift in the AD curve, resulting from an increase in any of the components of AD (C, I, G, X-M).

policies that focus on changing AD for the purpose of reducing short-term economic fluctuations, i.e. close deflationary and inflationary gaps, and hence achieve low unemployment and a low and stable rate of inflation.

taxes on income and wealth, paid directly to the government (ex-personal income taxes, corporate income taxes).

a fall in the rate of inflation (ex 7% in 2010; 5% in 2011)

growth in real GDP over a period of time, usually expressed as a percentage change in real GDP over time; is often calculated in per capita terms (per person in the population).

The use of resources in the best possibly way, so that there is no waste of resources.

the condition of being fair, often interpreted to mean 'equality" in the context of income distribution.

policy carried out by the government (fiscal policy) or the central bank (monetary policy) intended to increase AD and close a deflationary gap.

an approach to measuring GDP that adds up total spending of all buyers on all final goods and services within a year; includes C + I + G + (X - M).

a type of demand-side policy by the government in order to manipulate AD (by changing taxes and/or government spending) to achieve price stability and low unemployment

unemployment including workers who are in between jobs.

the level of real output produced by the economy when unemployment is equal to natural unemployment.

a measure of income inequality derived from the Lorenz curve = area between the Lorenz curve and line of perfect income equality, divided by entire area under line of perfect equality.

a plan relating government revenue to government spending, usually for a period of a year.

a measure of GDP that takes into account environmental destruction due to production or consumption activities; green GDP= GDP - value of environmental destruction

the total value of all final goods and services produced within the boundaries of a country, in a year.

the total income received by the residents of a country in a year, regardless of where the factors of production owned by the residents are located.

people without a job not included in official unemployment figures because they are not actively seeking a job (ex "discouraged workers") as well as underemployed people counted as fully employed in official unemployment figures.

an approach to measuring GDP that adds up all income earned by the factors of production in the course of producing total output within a year; includes wages, rent, interest and profits.

taxes on spending to buy goods and services, paid indirectly to the government through the sellers (ex sales taxes, VAT)

a type of interventionist supply-side policy intended to promote specific industries; include tax reductions, tax exemptions, low-interest loans, subsidies and grants for industries that are held to be important to support growth.

a sustained increase in the general price level

a policy pursued by some central banks focusing on targeting a particular rate of inflation and carrying out monetary policy (manipulation of interest rates) to achieve the targeted rate.

occurs when short-run equilibrium GDP is greater than potential GDP due to excess aggregate demand.

money that enters the circular flow of income in the form of investment spending, government spending or export revenues (spending by foreigners)

payment for borrowed money over a certain time period, expressed as a percentage of the borrowed amount; the "price" of money services.

spending by firms or the government to buy capital goods (machines, equipment, as well as infrastructure)

an AS curve with a horizontal section (when the economy is in recession), an upward-sloping section (when the economy approaches full employment output) and a vertical section (when the economy has reached maximum capacity output).

money that leaves the circular flow of income in the form of saving, taxes, and spending on imports

an AS curve showing real output produced as being independent of the price level; the LRAS is vertical at real GDP where unemployment= natural unemployment.

visual representation of income shares received by percentages of the population; the further away a Lorenz curve is from the line of perfect equality, the more unequal the distribution of income; forms the basis of computing the gini coefficient.

a type of demand-side policy undertaken by the central bank in order to manipulate AD (by changing interest rates) to achieve price stability and low unemployment.

the sum of frictional, seasonal and structural unemployment; is the unemployment level of the economy when it is producing potential output (= full employment output).

the value of exports minus the value of imports

a measure of output and income in terms of current prices (prices at any given moment in time).

an approach to measuring GDP that adds up the value of each good and service (PxQ) produced in the economy within a year, thus obtaining the value of all final goods and services

the level of real GDP produced when the economy is on its long-term growth trend, where cyclical unemployment= 0 and unemployment = natural unemployment.

the inability to satisfy basic physical needs (ex, food, clothing, shelter, etc) due to low income.

output per worker; it increases as a result of investments in physical, human and natural capital; a major cause of economic growth

the percentage of income paid as tax (average tax rate) increases as income increases.

the percentage of income paid as tax (average tax rate) remains constant as income increases

a measure of output and income in terms of constant prices that prevail in one particular year; therefore, real values eliminate the influence of price level changes over time.

falling real GDP over a period of at least two consecutive quarters (six consecutive months).

the percentage of income paid as tax (average tax rate) decreases as income increases.

the number of people with an income level below a predefined level that changes over time, defined as a percentage of society's median income; poverty is "relative" to other people's income; reflects the idea that people should be able to afford a lifestyle typical of their society.

unemployment including workers who are unemployed on a seasonal basis, ex ski instructors in the summer.

an AS curve showing the total amount of real output produced in a year to be directly related to the price level.

unemployment that is usually long-term, arising from changing demand for different labor skills (due to technological change or structural changes in the economy), changes in the geographical location of industries, and labor market rigidities.

transfers of income from taxpayers to vulnerable groups who are people in need, including unemployment benefits, child allowances, pensions, housing benefits and others.

policies that focus on the supply side of the economy, aiming to promote long-term economic growth and hence increase potential output (increase LRAS or Keynesian AS); may be interventionist (involving government intervention in the economy) or market-based (based on development of free competitive markets).

people who are employed, but who (i) work part-time when they would rather work full-time, and (ii) work at a different skill or lower skill level than what they were trained for (ex an engineer working as a waiter).

the number of people in the labor force actively looking for work but without a job, expressed as a percentage of the labor force (= number of unemployed / labor force x 100).

curve showing relationship between rate of inflation and rate of unemployment. Short run Phillips curve shows an inverse relationship, but long run Phillips curve is vertical at the natural rate of unemployment indicating that unemployment is independent of the price level.

arises from a decrease in SRAS which causes a rising price level (cost push inflation) and a fall in output.

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