Macro Definitions Flashcards
Aggregate Demand
The total value of goods and services demanded by different groups at a given price level in a nation
National Income
A measure of the total economic activity that takes place within a nation
Consumption
The total expenditure by households when they purchase goods and services
Circular flow of income
The exchanges that take place when goods and services or factors or production are sold
GDP
The total value of all goods and services produced in an economy in a given period of time
Recession
Negative economic growth occurring over two or more quarters
The Money market
A model showing the total supply and demand for money in a nation
Monetary policy
The manipulation of interest rates and money supply to influence the level of AD in a country
Infrastructure
The capital stock of a country that facilitates economic growth - usually provided by government
Equity
Refers to fairness- where all individuals in society have a fair chance at achieving economic success
Equality
Minimizing the disparities in income and wealth among a nation’s households
(Economic) Efficiency
A level of performance that uses the least amount of resources to achieve highest amount of output
Absolute poverty
People earning below internationally defined levels of income i.e. $1.90
Relative poverty
Refers to low levels of income that is country-specific - relative the average level of income in that country
Keynesian Multiplier Effect
Any change in government spending will have a larger ultimate effect on the nation’s GDP as the resulting change in household income leads to further changes in consumption and investment in the economy.