Chapter 1 Flashcards
What is macroeconomics?
Person/people acting as one
Unlimited desires
Limited resources
Government policy to correct market errors
Market-determined allocation
What are important variables?
Inflation
Unemployment
Investment
National GDP
Wage rate
Interest rate
What is inflation?
Annualized rate of change in the price level over a period
What is unemployment?
Person above an age not being in paid employment but available for work
What is investment?
Allocate money in the expectation of some benefit in the future
What is GDP?
Monetary value of all finished goods and services made within a country during a specific period
What is wage rate?
The amount paid to a worker per unit of time
What is interest rate?
The amount a lender charges for the use of assets expressed as a percentage of the principal
What is savings?
The amount leftover after an individual’s consumer spending is subtracted from the amount of disposable income earned in each period
What is the business cycle?
Short-run contractions and expansions in economic activity
What is recession?
2 consecutive quarters of negative GDP growth
Causes unemployment rate to rise
What is deflation?
When prices of most goods and services decline
What is inflation?
The % increase in the level of prices
What is hyperinflation?
An extremely high rate of inflation
What is disinflation?
Inflation but at a lower rate
What is an open economy?
Extensive trading and financial relationships with other national economies
What is a closed economy?
An economy that does not interact economically with the rest of the world
What is trade surplus?
Exports exceed imports
What is trade deficit?
Imports exceed exports
