ADE 3 Flashcards
Macroeconomics
the study of economy-wide phenomena, inlcuding inflation, unemployment and economic growth
Net exports
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Net capital outflow
the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners
Market failure
a situation where scare resources are not allocated to their most efficient use
Market economy
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
Microeconomics
the study of how households and firms make decisions and how they interact in markets
Natural rate of output
the output level in an economy when all existing factor of production(land, labour, capitaland technology resources) are fully utilized and where unemployment is at its natural rate
Money supply
the quantity of moeny available in the economy
Market
a group of buyers and sellers of a particular good or service
Liquidity
the ease with which an asset can be converted into the economy’s medium of exchange
Multiplier effect
the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending
Money multiplier
the amount of money the banking system generates with each unit of reserves
Monetary policy
the st of actions taken by the central bank in order to affect the money supply
Market power
the ability of a single economic agent(or small group of agents) to have a substantial influence on market prices
Natural resources
the inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits
