Chapter 1 Flashcards

1
Q

What is macroeconomics?

A

Person/people acting as one
Unlimited desires
Limited resources
Government policy to correct market errors
Market-determined allocation

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2
Q

What are important variables?

A

Inflation
Unemployment
Investment
National GDP
Wage rate
Interest rate

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3
Q

What is inflation?

A

Annualized rate of change in the price level over a period

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4
Q

What is unemployment?

A

Person above an age not being in paid employment but available for work

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5
Q

What is investment?

A

Allocate money in the expectation of some benefit in the future

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6
Q

What is GDP?

A

Monetary value of all finished goods and services made within a country during a specific period

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7
Q

What is wage rate?

A

The amount paid to a worker per unit of time

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8
Q

What is interest rate?

A

The amount a lender charges for the use of assets expressed as a percentage of the principal

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9
Q

What is savings?

A

The amount leftover after an individual’s consumer spending is subtracted from the amount of disposable income earned in each period

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10
Q

What is the business cycle?

A

Short-run contractions and expansions in economic activity

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11
Q

What is recession?

A

2 consecutive quarters of negative GDP growth
Causes unemployment rate to rise

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12
Q

What is deflation?

A

When prices of most goods and services decline

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13
Q

What is inflation?

A

The % increase in the level of prices

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14
Q

What is hyperinflation?

A

An extremely high rate of inflation

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15
Q

What is disinflation?

A

Inflation but at a lower rate

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16
Q

What is an open economy?

A

Extensive trading and financial relationships with other national economies

17
Q

What is a closed economy?

A

An economy that does not interact economically with the rest of the world

18
Q

What is trade surplus?

A

Exports exceed imports

19
Q

What is trade deficit?

A

Imports exceed exports