ECON ch 5- EXAM #1 Flashcards
4 macro (mirco) players
- households
- firms
- gov
- rest of the world
3 market arenas
- goods and services (output) market
- labor market
- financial- capital market
3 economic policy (gov.)
- fiscal
- monetary
- growth
microeconomics examines
the behavior of individual decision-making units (firms and households)
macroeconomics deals with
with the economy as a whole; it examines the behavior of economic aggregates investment, and the overall price level
refers to the behavior of all households and firms summed together
aggregate behavior
3 major objectives of macroeconomics
- output growth
- inflation
- unemployment
Y= production =
=income = GDP
% change in GDP formula
GDP 2013- GDP 2012/ GDP 2012 X100
a period during which aggregate output decreases and unemployment increases
recession
a prolonged and deep recession
depression
people who want to have a job
labor force
how to calculate unemployment rate
unemployed people/labor force X100
is an increase in the overall price level
inflation
is a period of very rapid increases in the overall price level
hyperinflation
is a decrease in the overall price level
deflation
microeconomics generally
conclude that markets work well; prices are flexible and allow markets to stay in equilibrium
are prices that do not always adjust rapidly to maintain the equilibrium in markets
sticky prices
refers to the gov. role in regulating the state of economy
fine-tuning
generally conclude that markets work well; prices are flexible and allow markets to stay in equilibrium
microeconomics
a period of severe economic contraction; low output and high unemployment that began in 1929 and continued thru out the 1930s
the great depression
failed to explain the prolonged existence of low output and high unemployment during the great depression
simple classical models
who believed that the gov could intervene in the economy to affect the level of output and employment
keynes
changes in taxes, interest rates, money supply, and gov spending in order to control inflation and unemployment
fine tuning
unemployment and inflation rose sharply and unexpectedly
stagflation
economic expansion became the longest on record at 107 months in
feb 2000
referes to the gov policies concerning gov taxes and spending
fiscal policy
consists of tools used by the federal reserve to set (control) the quantity of money in the economy
monetary policy
are gov policies that focus on stimulating aggregate supply instead of aggregate demand
growth policies (supply side policies)
the total demand for goods and services in an economy
aggregate demand
the total supply of goods and services in an economy
aggregate supply
the cycle of SR ups and downs in the economy
business cycle
this is the total quantity of goods and services produced in an economy in a given period for final consumption
aggregate output (measured by GDP)
is the period in the business cycle from a trough up to a peak, during which output and employment rate rise
expansion or boom
is the period in the business cycle from a peak down to a trough, during which output and employment fall
contraction, recession, or slump
during recession, what does GDP do and Unemployment do
GDP falls and U rises
during expansion, what does GDP and Unemployment do
GDP rises and U falls
