Chapter 9 Flashcards
The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products
Macroeconomics
The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products
Macroeconomics
The total market value of all final goods and services produced within a nation’s borders each year
GDP-gross domestic product
Upward and downward changes in the level of economic activity
Business cycles
A decline in GDP that lasts for at least two consecutive quarters
recession
A measure of how many people have jobs within an economy
Employment/unemployment
The condition when all people who want to work and can work have jobs
Full employment
Short-term unemployment that is not related to the business cycle
frictional unemployment
Unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry or region; not related to the business cycle
Structural unemployment
Unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy
Cyclical unemployment
Unemployment that occurs during specific seasons in certain industries
seasonal unemployment
The situation in which the average of all prices of goods and services is rising
inflation
When the average of all prices of goods and services is rising and income is rising more slowly the ____________ of consumers decrease.
purchasing power
Inflation that occurs when the demand for goods and services is greater than the supply
demand-pull inflation
Inflation that occurs when increases in production costs push up the prices of final goods and services.
cost-push inflation
The cyclical process in which wage increases lead to a rise in the price of products. As the price of products goes up, so does the demand for higher wages, thus continuing the cycle.
wage-price spiral
An index of the prices of a “market basket” of goods and services purchased by typical urban consumers
CPI (consumer price index)
An index of the prices paid by producers and wholesalers for various commodities, such as raw materials, partially finished goods, and finished products
PPI (producer price index)
A government’s programs for controlling the amount of money circulating in the economy and interest rates is effected by which types of policies?
monetary policy
The central banking system of the United States
The Fed (Federal Reserve System)
The 12-member Fed policy-making body that meets eight times a year to make monetary policy decisions
FOMC (Federal Open Market Committee)
A tool used by the Federal Reserve which involves the purchase or sale of U.S. government bonds
open market operations
The amount of cash that banks must retain (in their vaults or an account at a district bank) relative to the current deposits made by customers
reserve requirement
The interest rate the Federal Reserve charges its member banks
discount rate
The Fed’s use of monetary policy to tighten the money supply by selling government securities or raising interest rates
contractionary policy
The Fed’s use of monetary policy to increase or loosen the growth of the money supply
expansionary policy
The government’s use of taxation and spending to affect the economy
Fiscal policy
The situation when a government, by its actions, reduces spending in the private sector
Crowding out
growth strategy utilized by a business to increase access to or demand for its product or service
Market expansion
The sourcing of raw materials (inputs) and other production needs
resource aquisition
