Ch 1 Vocab Flashcards
Macroeconomics
the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.
Real GDP
This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output.
Inflation and deflation
A increase/decrease in the overall level of prices.
Unemployment
the number or proportion of unemployed people.
Recession
A sustained period of falling real income.
Depression
A very severe recession.
Models
A simplified representation of reality, often using diagrams or equations, that shows how variables interact.
Endogenous variables
A variable that is explained by a particular model; a variable whose value is determined by the model’s solution.
Exogenous variables
A variable that a particular model takes as given; a variable whose value is independent of the model’s solution.
Market clearing
A model that assumes that prices freely adjust to equilibrate supply and demand.
Flexible prices
Prices that adjust quickly to equilibrate supply and demand.
Microeconomics
The study of individual markets and decision makers.
inflation rate
A measure of how fast prices are rising.
unemployment rate
The percentage of those in the labor force who do not have jobs.
Sticky Prices
Prices that adjust sluggishly and, therefore, do not always equilibrate supply and demand.
