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Economics - Macroeconomics

georgepetenjk Created by 10 mon ago

Cards in this deck(69)

occurs when workers look for new employment or transition out of old jobs and into new ones. This temporary period of unemployment is the result of voluntary transitions within an economy

unemployment that it the result of cycles of economic upturn and downturn.

A measure of the number of people in an economy who are working in low-paid or part-time jobs because they can't find jobs that match their skills.

a longer-lasting form of unemployment caused by fundamental shifts in an economy. Occurs because workers lack the requisite job skills or live too far from regions where jobs are available. Can last for decades and usually requires a radical change to reverse.

a sustained rise in the level of prices generally or a sustained fall in the purchasing power of money

decrease in the general price level

a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession.

an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP) of at least 10% in a given year.1

Gross Domestic Product the market value of all final goods and services produced within a country in a given period of time

consumption, investment, government spending, and net exports.

the highest point of the economy before a recession begins

the lowest point of the economy before a recovery begins

the production of goods and services valued at current prices

the value of a country's total output of goods and services adjusted for inflation or deflation.

a nation's gdp divided by it's total population

people who are 16 or older and employed or actively looking for and available to do work. Excludes people in the military, prison, and other institutions.

The view that an economy will self-correct from periods of economic shock if left alone. AKA "laissez-faire". developed from the writings of economists and philosophers such as Adam Smith, David Ricardo, and John Stuart Mill.

-wages are determined by the productive contribution of a worker, -prices are decided by the forces of supply and demand, and -interest rates are influenced by the balance between the demand and supply of loanable funds.

tax hikes or spending cuts intended to reduce (shift) aggregate demand

purchases made by businesses and individuals on capital goods such as machinery, equipment, and buildings. One of the components of aggregate demand and contributes to economic growth

a Latin phrase that means "all other things held constant". in economics, clarifies that a change in a variable being observed is in the consideration that nothing else has changed. An example of expressing this in a sentence would be: If the price of lumber increases, ceteris paribus, demand for homes will decrease.

internal market forces, external shocks, policy levers

the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth

A factor related to the economy—such as inflation rate, industrial production, or economic sector membership.

Named after English economist John Maynard Keynes, the theory emphasizing that government spending and deficits can help the economy deal with its ups and downs. Proponents of this theory advocate using the power of government to stimulate the economy when it is lagging.

the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy

a measurement of the total amount of demand for all finished goods and services produced in an economy

refers to the supply of products that companies produce and plan to sell at a certain price in a given period.

shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy

a curve that shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level

a graph of the relationship between the price of a good and the quantity demanded

income, prices of related goods, tastes, expectations, number of buyers

curve generally moves downward from the left to the right. This movement expresses the law of demand, which states that as the price of a given commodity increases, the quantity demanded decreases as long as all else is equal.

a graph of the relationship between the price of a good and the quantity supplied

input prices, technology, expectations, number of sellers

will move upward from left to right, illustrating the law of supply: As the price of a given commodity increases, the quantity supplied will increase (all else being equal).

Government policy that attempts to manage the economy by controlling taxing and spending.

medium of exchange, unit of account, store of value

Exchange goods without involving money.

the practice of keeping a percentage of deposits on hand but loaning out the rest

a bank's reserves over and above its required reserves

The amount of money the Fed requires banks to keep on hand to meet their liabilities. Its size helps determine how much banks can lend.

(1/reserve ratio) the amount of money the banking system generates with each dollar of reserves.

lowering interest rates, which spurs investment, and through putting more money in the hands of consumers, making them feel wealthier, and thus stimulating spending

reduces liquidity and increases interest rates which has a negative impact on both production and consumption and therefore, economic growth

the central bank of the United States

open market operations, discount policy, and reserve requirements

the purchase and sale of U.S. government bonds by the Fed

the policy tool of setting the discount rate and the terms of discount lending

the amount of reserves that banks are required to keep on hand

rate the Federal Reserve charges for loans to commercial banks

allowing banks to decrease their reserve ratios per deposit allows the bank to lend more

could lessen inflation by lowering prices

MV=PT M=money supply V=velocity of money P=average price level T=volume of transactions for goods and services

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.

theory that maintains that increasing the supply of goods and services is the engine of economic growth. Additionally, it advocates tax cuts as a way to encourage job creation, business expansion, and entrepreneurial activity.

the money a government gains from the collection of taxes

when a country exports more than it imports

situation in which a country imports more than it exports

Taxes added to prices of imported goods, making them more expensive so that they don't sell as easily as local goods

the ability to produce a good using fewer inputs than another producer

the ability to produce a good at a lower opportunity cost than another producer

goods produced abroad and sold domestically

Goods and Services sold to other countries

the set of all consumption bundles that are affordable, given the consumer's income and prevailing prices

Government practice of spending more than it takes in from taxes

spending category about which government planners can make choices

Required govt spending by permanent laws

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