Macro Definitions Flashcards

1
Q

Aggregate Demand

A

The total value of goods and services demanded by different groups at a given price level in a nation

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2
Q

National Income

A

A measure of the total economic activity that takes place within a nation

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3
Q

Consumption

A

The total expenditure by households when they purchase goods and services

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4
Q

Circular flow of income

A

The exchanges that take place when goods and services or factors or production are sold

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5
Q

GDP

A

The total value of all goods and services produced in an economy in a given period of time

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6
Q

Recession

A

Negative economic growth occurring over two or more quarters

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7
Q

The Money market

A

A model showing the total supply and demand for money in a nation

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8
Q

Monetary policy

A

The manipulation of interest rates and money supply to influence the level of AD in a country

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9
Q

Infrastructure

A

The capital stock of a country that facilitates economic growth - usually provided by government

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10
Q

Equity

A

Refers to fairness- where all individuals in society have a fair chance at achieving economic success

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11
Q

Equality

A

Minimizing the disparities in income and wealth among a nation’s households

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12
Q

(Economic) Efficiency

A

A level of performance that uses the least amount of resources to achieve highest amount of output

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13
Q

Absolute poverty

A

People earning below internationally defined levels of income i.e. $1.90

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14
Q

Relative poverty

A

Refers to low levels of income that is country-specific - relative the average level of income in that country

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15
Q

Keynesian Multiplier Effect

A

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.

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16
Q

Economic Growth

A

An increase in real output over time, measured by changes in real GDP

17
Q

Unemployment

A

The condition of someone of working age who is willing and able to work, actively seeking employment, but unable to find a job

18
Q

Inflation

A

A sustained increase in the average price level of goods and services in a nation

19
Q

Demand-pull inflation

A

Inflation caused by an increase in AD in an economy

20
Q

Cost-push inflation

A

Inflation caused by an increase in the costs of production in an economy

21
Q

Demand-deficient deflation

A

Result of fall in demand - Bad

22
Q

Supply-side deflation

A

Result of increase in productivity and lower costs- Good

23
Q

Productivity

A

Amount of output per unit of input

24
Q

Business confidence

A

Related to the expectations of businesses about the future of economic conditions and affects the level of investment

25
Q

Inflationary gap

A

Situation where the economy is at a level of output greater than the full employment level of output/above potential output

26
Q

Investment

A

Expenditure/spending by firms on capital

27
Q

Privatization

A

The government sells state-owned enterprises to the private sector

28
Q

Budget deficit

A

When government spending exceeds government revenue

29
Q

Deflationary gap

A

Situation where the economy is at a level of output lower than the full employment level output/ below potential output

30
Q

Rate of inflation

A

The rate at which prices increase over time, causing the value of money to fall