Economics: Macroeconomics Flashcards
Aggregate Demand
The quantity of goods and services that households, businesses, government and foreign customers want to buy at any given level of prices
Aggregate Demand Curve
Inverse relationship between the price level and real output
Aggregate Income
The value of all the payments earned by the suppliers of factors used in the production of goods and services
Aggregate Outcome
The value of all the goods and services produced in a specified period of time.
Aggregate Supply
The quantity of goods and services producers are willing to supply at any given level of price
Aggregate Supply Curve
The level of domestic output that companies will produce at each price level
Balance of trade deficit
When the domestic economy is spending more on foreign goods and services than foreign economies are spending on domestic goods and services
Capital Consumption Allowance
A measure of the wear and tear (depreciation) of the capital stock that occurs in the production of goods and services
Capital depending investment
Increases the stock of capital relative to labor
Capital Stock
The accumulated amount of buildings, machinery, and equipment used to produce goods and services.
Convergence
The tendency for differences in output per capita across countries to diminish over time; in technical analysis, a term that describes the case when an indicator moves in the same manner as the security being analyzed
Cyclical Companies
Companies with sales and profits that regularly expand and contract with the business cycle or state of economy
Defensive Companies
Companies with sales and profits that have little sensitivity to the business cycle or state of the economy
Diminishing Marginal Productivity
Describes a state in which each additional unit of input produced less output than previously
Fiscal Policy
The use of taxes and government spending to affect the level of aggregate expenditures
GDP Deflator
A gauge of prices and inflation that measures the aggregate changes in prices across the overall economy
Gross domestic product
The market value of all final goods and services produced within the economy in a given period of time (output definition) of, equivalently, the aggregate income earned by all households, all companies and the government within the economy in a given period of time (income definition)
Implicit price deflator for GDP
A gauge of prices and inflation that measures the aggregate changes in prices across the overall economy
Inflation
The percentage increase in the general price level from one period to the next; a sustained rise in the overall level of prices in an economy.
Interest
Payment for lending funds
Inventory Investment
Net change in business inventory
Labor force
The portion of the working age population (over the age of 16) that is employed or is available for but not working (unemployed)
Labor productivity
The quantity of goods and services (real GDP) that a worker can produce in one hour of work.
Marginal propensity to Consume
The proportion of an additional unit of disposable income that is consumed or spent; the change in consumption for small change in income.
Marginal propensity to save
The proportion of an additional unit of disposable income that is saved (not spent).
Monetary Policy
Actions taken by a nations central bank to affect aggregate outcome and prices through changes in bank reserves, reserve requirements, or its target interest rate.
National Income
The income received by all factors of production used in the generation of final output. National income equals gross domestic product (or, in some countries, gross national product) minus the capital consumption allowance and a statistical discrepancy.
Nominal GDP
The value of goods and services measured at current prices
Non-renewable resources
Finite resources that are depleted once they are consumed such as oil and coal
Per Capita real GDP
Real GDP divided by the size of the population, often used as a measure of the average standard of living in a country.
Personal disposable income
Equal to personal income less personal taxes
Personal Income
A broad measure of household income that includes all income received by households, whether earned or unearned; measures the ability of consumers to make purchases.
Potential GDP
The level of real GDP that can be produced at full employment; measures the productivity capacity of the economy
Production Function
Provides the quantitative link between the levels of output that the economy can produce and the inputs used in the production process.
Productivity
The amount of output produced by workers in a given period of time - for example, output per hour worked; measures the efficiency of labor.
Profit
The return that owners of a company receive for the use of their capital and the assumption of financial risk when making their investments.
Real GDP
The value of goods and services produced, measured at base year prices.
Real interest rate
Nominal interest rate minus the expected rate of inflation
Recession
A period during which real GDP decreases (is negative growth) for at least two successive quarters, or a period of significant decline in total output, income, employment and sales usually lasting from six months to a year.
Renewable resources
Resources that can be replenished, such as a forest
Rent
Payment for the use of property.
Stagflation
When a high inflation rate of combined with a high level of unemployment and a slowdown of the economy
Sustainable rate of economic growth
The rate of increase in the economy’s productive capacity or potential GDP.
Technology
The process a company uses to transform inputs into outputs
Total Factor productivity
A scale factor that reflects the portion of growth that is not accounted for by explicit factor inputs (eg capital and labor)
Wealth effect
An increase (decrease) in household wealth increases (decreases) consumer spending out of a given level of current income.
