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Macroecon Final > Definitions > Flashcards

Definitions Flashcards

1
Q

Three Goals of Macroeconomics

A

Economic Growth
Stable Prices
Full Employment

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2
Q

Economic Growth

A

achieved by increasing the economy’s ability to produce goods and services

  • indicated by measuring the growth rate of production
  • indicated by increases in the quantities of the resources used to produce goods
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3
Q

Stable Prices

A

achieved by avoiding or limiting fluctuations and inflationary expansions of business cycles
-indicated by month-to-month and year-to-year changes in various economic measures

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4
Q

Full Employment

A

achieved when all available resources are used to produce goods and services
-commonly indicated by the employment of labor resources

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5
Q

Peak

A

the transition of a business cycle from an expansion and a contraction

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6
Q

Trough

A

a low turning point or local minimum of a business cycle

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7
Q

Expansion

A

the period of a business cycle during which total production and total employment are increasing

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8
Q

Contraction

A

the economy as a whole is in a decline

  • occurs after the business cycle peaks, but before it becomes a trough
  • said to occur when a country’s real GDP has declined for 2 or more consecutive quarters
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9
Q

Recession

A

a general slowdown in economic activity

-occurs when there is a widespread drop in spending

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10
Q

Depression

A

a sustained, long-term downturn in economic activity in one or more economies
-characterized by its length; by abnormally large increases in unemployment

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11
Q

Real GDP

A

measure of value of economic output adjusted for price changes ( taking the quantities of one year and multiplying them by the base year prices)

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12
Q

Price Level

A

measure of the average foods and services in the economy

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13
Q

Natural Rate of Unemployment

A

normal rate of unemployment consisting of frictional unemployment plus structural unemployment

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14
Q

Frictional Unemployment

A

short-term unemployment that arises from the process of matching workers with jobs

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15
Q

Structural Unemployment

A

unemployment that arises from a persistent mismatch between the skills and attributes of workers and the requirements of jobs

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16
Q

Potential GDP

A

The level of Real GDP attained when all firms are producing at capacity

17
Q

Consumer Confidence

A

measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation

18
Q

Producer Confidence

A

sentiment indicator for the manufacturing industry

19
Q

Procyclical Measures

A

describes how an economic quantity is related to economic fluctuations
-moving in the same direction of the overall economic cycle: rising when the economy is strengthening and falling when weakening

20
Q

Countercyclical Measures

A

describes how an economic quantity is related to economic fluctuations
-moving in the opposite direction of the overall economic cycle: rising when the economy is weakening, and falling when the economy is strengthening

21
Q

Taxes

A

an involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government activities

22
Q

Transfer Payments

A

a payment to individuals by the federal government through various social benefit programs

23
Q

Benefits of Recession

A

enables assessment of the effectiveness of a family budget and community crisis management plans
-encourage self employment

24
Q

Stagflation

A

a condition of slow economic growth and relatively high unemployment

25
Q

Full Employment Equilibrium

A

level of employment rates when there is NO CYCLICAL UNEMPLOYMENT

  • when the economy is employing all of its available resources
  • potential GDP = real GDP
26
Q

Recessionary Gap

A

summarizes the situation where an economy is operating at or below its full employment equilibrium
-potential GDP > real GDP

27
Q

Inflationary Gap:

A

amount by which the real GDP exceeds potential GDP

-above full employment equilibrium

28
Q

Short Run AS Curve

A

captures the relationship between real production and the price level

29
Q

Long Run AS Curve

A

conceptual time or period in which there are no fixed factors of production as to changing the output level by changing the capital stock or by entering or leaving an industry

30
Q

Price Index

A

normalized average of prices for a given class of goods or services in a given region, during a given interval of time

31
Q

Money

A

any asset that people are generally willing to accept in exchange for goods and services or for payments of debts

32
Q

Commodity

A

a good used as money that also has value of independent of its use as money

33
Q

Fiat Money

A

money; such as paper currency; that is authorized by a central bank or government body and that doesn’t have to be exchanged by the central bank for gold or some other commodity

Macroecon Final (2 decks)

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