Chapter 13-16 Flashcards
Macroeconomics
the branch of economics concerned with large-scale or general economic factors, such as interest rates and national productivity
Property Income From Abroad
income earned by assets held in foreign countries
Net Property Income From Abroad
the difference between income earned from assets abroad minus income paid to foreign assets
GDP
the total value of all the goods and services produced and sold in a single year within a country
GNI
the value of all goods and services produced by a country in a single year (including foreign assets and excluding assets from foreign countries)
Real GDP / GNI
nominal GDP / GNI adjusted for inflation
Boom
a period of increased commercial activity within an economy or industry (crest)
Trough
a point that marks the end of a recession
Recession
two consecutive quarters of falling GDP
Recovery
the business cycle stage following a recession - GDP is gaining stability again
Aggregate Demand
the total spending on goods and services in a period of time at a given price level
Durable Good
a good that can be used over a long period of time (usually more than a year) (car, appliances)
Non-Durable Good
goods that get immediately used up over used in a very short period of time (toilet paper, rice, newspaper)
Replacement Investment
when firms spend on capital in order to maintain the productivity of their existing capital
Induced Investment
when firms spend on capital to increase tier output to respond to higher demand in the economy
Capital Stock
includes all goods that are made by people and used to produce other goods and services (factories, machines, offices, computers)
Disposable Income
the income that people have remaining for spending and saving after incomes taxes have been paid
Exports
goods and services that are bought by foreigners
Imports
goods and services that are brought into the country
Aggregate Supply
the total amount of goods and services that all industries in the economy will produce at every given price level
Commodities
a good sold for production or consumption just as it was found in nature (primary product)
Stagflation
high inflation combined with high unemployment and stagnant demand in a country’s economy
Output Method
a method to calculate GDP by finding the actual value of all the goods and services produced in a nation
Income Method
a method to calculate GDP by finding the amount of all incomes combined in an economy
Expenditure Method
a method to calculate GDP by finding the amount of spending on all goods and services in the economy [C+I+G+(X-M)]
GDP per Capita
GDP / population
Consumption (C)
the total spending by consumers on domestic goods and services
Investment (I)
the addition of capital stock to the economy, carried out by firms
Government Spending (G)
money spent by the government on goods and services (health, education, law and order, social security, housing, defense)
Net Exports (X-M)
export revenues minus import expenditures
Short Term (macro def)
the period of time when the prices of the factors of production do not change (most importantly: the price of labor stays fixed)
Supply Side shocks
shift in the SRAS curve
New Classical LRAS
- belief of no government intervention
- perfectly inelastic supply curve, as economy is running at full capacity
Keynesian AS
Phase 1 : perfectly elastic - as quantity increase price does not because of spare capacity - high levels of unused factors such as unemployment labor and underutilized capital
Phase 2 : when the economy is nearing potential output and the spare capacity becomes used up, with scarce factors of production
Phase 3 : when the economy reaches its full capacity and it becomes impossible to increase output because all FOP are fully employed - perfectly inelastic curve
D E D U
D = Define key terms
E = Explain economic theory
D = Diagrams explained
U = Understanding of content
Spare Capacity
when there are spare factors of production including land, labour and capital - an economy with a lot of spare capacity has an elastic supply curve
Hidden Economy
the illegal market in a nation
- working without a permit / under the table
- drug trade
- trafficking
Leakages
- saving
- imports
- taxation
Injection
- government spending
- exports
- investment
