ADE 2 Flashcards
Eurosystem
the system made up of the ECB plus the national central banks of each of the 16 countries comprising the European Monetary Union
Gross domestic product (GDP)
the market value of all final goods and services produced within a country in a give period of time
GDP deflator
a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
Inflation
an increase in the overall level of prices in the economy
Indirect tax
a tax that is livied on goods and services bought
Inflation rate
the percentage change in the price index from the preceding period
Inflation tax
the revenue the government raises by creating money
Law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
Fixed costs
costs that are not determined by the quantity of output produced
Fiat money
money without intrinsic value that is used as money because of government decree
Fractional-reserve banking
a banking system in which banks hold only a fraction of deposits as reserve
Investment
spending on capital equipment, inventories and structures, including household purchases of new housing
Externality
the uncompensated impact of one person’s actions on the well-being of a bystander (a third party)
Future value
the amount of moeny in the future that an amount of moeny today will yield, given prevailing interest rates
Federal Reserve (Fed)
the central bank of the United States
Financial intermediaries
financial institutions through which savers can indirectly provide fuds to borrowers
Human capital
the accumulation of investments in people, such as education and on-the -job training
In-kind transfers
transfers to the poor given in the form of goods and services rather than cash
Financial system
the group of institutions in the economy that help to match one person’s saving with another person’s investment
Labour force
the total number workers, including both the employed and the unemployed
Imports
goods produced abroad and purchase for use in the domestic economy
Government purchases
spending on goods and services by local, state and national governments
Import quota
a limit on the quantity of a good that can be produced abroad and sold domestically
Gross domestic product per head
the market value of all final goods and services produced within a country in a given period of time divided by the population of a country to give a per capita figure
Frictional unemployment
unemployment that results because it takes time for workers to seach for the jobs that best suit their tastes and skills
Exports
goods produced domestically and sold abroad
Law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
Factors of production
the inputs used to produce goods and services
Labour force participation rate (or economic activity rate)
the percentage of the adult population that is in the labour force
Indexation
the automatic correction of a money amount for the effects of inflation by law or contract
