Capter 1 - Introduction Flashcards
Average labor productivity
The amount of output produced per unit of labor input (e.g. Per worker or per hour of work)
Closed Economy
doesn’t interact economically with the rest of the world
Open Economy
Extensive trading and financial relationships with other national economies
Inflation
When the prices of most g&s rise over time
Deflation
Prices of most g&s fall
Economic model
Simplified description of some aspect of the Economy (usually in math form)
Economic theory
Set of ideas about the Economy organized in a logical framework
Empirical analysis
Implications of the ec.theory are evaluated by comparing them with data from the real world
Equilibrium
Situation where there is no pressure for the wages or prices to change
Fiscal policy
National, state, and local levels, concerns government spending and taxation
Monetary policy
Rate of growth of the nations money supply and is under control of the central bank (in the US it is Federal Reserve System, or the Fed)
Positive analysis
Economic consequences of the policy but doesn’t address whether it is desirable or not
Normative analysis
Whether the policy should be used
Stagflation
Both high unemployment and high inflation
Unemployment
People who are available for work and are actively searching for work but cannot find jobs
