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Macroecon Flashcards

1
Q

Microeconomics

A

The study of how firms and households make choices, how they interact in the markets, and how the government attempts to influence their choices.

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2
Q

Macroeconomics:

A

The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

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3
Q

Business Cycle

A

Alternating periods of economic expansion and economic recession.

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4
Q

Expansion

A

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

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5
Q

Recession

A

The period of a business cycle during which total production and total employment are decreasing.

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6
Q

Economic Growth

A

The ability of an economy to produce increasing quantities of goods and services.

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7
Q

Inflation Rate

A

The percentage increase in the price level from one year to the next.

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8
Q

Gross domestic product (GDP)

A

The market value of all final goods and services produced in a geographic area (country) during a period of time, typically one year.

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9
Q

Final good or service

A

A good or service purchased by a final user.

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10
Q

Intermediate good or service

A

A good or service that is input into another good or service, such as car seats.

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11
Q

Transfer Payments

A

Payments by the government to households for which the government does not receive a new good or service in return.

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12
Q

Expenditure approach

A

Measuring GDP by adding up all the different types of expenditure in the economy.

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13
Q

Income approach

A

Measuring GDP by adding up all the income received by the owners of factors of production.

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14
Q

Gross Operating surplus

A

Payments made to the owners of capital.

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15
Q

Net operating surplus

A

Payments to the owners of capital in excess of depreciation.

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16
Q

Consumption of capital

A

The amount of capital that wears out (depreciates) during use.

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17
Q

Gross mixed income

A

Paid to the owners of small business, this includes payments for labour and capital.

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18
Q

Taxes less subsidies

A

Payments to the government by businesses net of transfers from government to businesses.

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19
Q

Final consumption expenditure

A

Purchases of goods or services that will be used to satisfy individual or community needs and wants.

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20
Q

Gross fixed capital formation

A

Purchases of capital by firms, government, and households.

Net exports: Exports minus imports.

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21
Q

Exports

A

Goods and services produced in Canada that will be consumed by people in other countries.

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22
Q

Imports

A

Goods and services produced by other countries that will be consumed in Canada.

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23
Q

Statistical discrepancy

A

One-half of the difference between the estimates of GDP generated by the expenditure approach and the income approach.

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24
Q

Consumption (C)

A

spending by households on goods and services.

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25
Investments (I)
The purchase of capital by firms.
26
Government spending (G)
Spending on consumption goods and capital undertaken by the government.
27
Value-added
The market value a firm adds to a product.
28
Household production
Goods and services people produce for themselves.
29
Underground economy
Buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal.
30
Nominal GDP
The value of final goods and services evaluated at current-year prices.
31
Real GDP
The value of final goods and services evaluated at base-year prices.
32
Price level
A measure of the average prices of goods and services in the economy.
33
GDP deflator
A measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100.
34
Unemployment rate
The percentage of the labour force that is unemployed.
35
Working-age population
People 15 years of age and older who are legally entitled to work in Canada.
36
Labour force
he sum of employed and unemployed workers in the economy.
37
Labour force participation rate
he percentage of the working-age population in the labour force.
38
Employment-population ratio
A measure of the portion of the population engaged in paid work.
39
Discouraged workers
People who are available for work but have not looked or a job during the previous four weeks because they believe no jobs are available for them.
40
Frictional unemployment
Short-term unemployment that arises from the process of matching workers with jobs.
41
Structural unemployment
Unemployment that arises from a persistent mismatch between the skills and attributes of workers and the requirements of the jobs.
42
Cyclical unemployment
Unemployment caused by a business cycle recession.
43
Seasonal unemployment
Unemployment that is due to seasonal factors, such as weather or the fluctuation in demand for some products during different times of the year.
44
Natural rate of unemployment
The normal rate of unemployment, consisting of frictional unemployment plus structural unemployment.
45
Efficiency wage
A higher-than-market wage that a firm pays to increase worker productivity.
46
Inflation
A general increase in the prices of goods and services over time.
47
Price level
A measure of the average prices of goods and services in the economy.
48
Inflation rate
The percentage increase in the price level from one year to the next.
49
Consumer price index (CPI)
An average of the prices of the goods and services purchased by a typical household.
50
Producer price index (PPI)
An average of the prices received by producers of goods and services at all stages of production.
51
Nominal interest rate
The stated interest rate on a loan.
52
Real interest rate
The nominal rate minus the inflation rate.
53
Menu costs
The costs to firms of changing prices.
54
Log-run economic growth
The process by which rising productivity increases the average standard of living.
55
Labour productivity
The number of goods and services that can be produced by one worker or by one hour of work.
56
Capital
Manufactured goods that are used to produce other goods and services.
57
Potential GDP
The level of real GDP attained when all firms are producing at capacity.
58
Financial System
The system of financial markets and financial intermediaries through which firms acquire funds from households.
59
Financial markets
Market where financial securities, such as stocks and bonds, are bought and sold.
60
Financial Intermediaries
Firms such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers.
61
The market for loanable funds
The interaction of borrowers and lenders that determines the market interest rate and the number of loanable funds exchanged.
62
Crowding Out
A decline I private investment expenditures as a result of an increase in government purchases.
63
Industrial Revolution
The application of mechanical power to the production of goods, beginning in England around 1750.
64
Economic growth model
A model that explains growth rates in real GDP per capita over the long run.
65
Technological change
A change in the quantity of output a firm can produce using a given quantity of inputs.
66
Human Capital
The accumulated knowledge and skills that workers acquire from education ad training or from their life experiences.
67
Per-worker production function
The relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant.
68
New Growth Theory
A model of long-run economic growth that emphasizes that technological change is influenced by economic incentives and so is determined by the working of the market system.
69
Patent
The exclusive right to produce a product for a period of 20 years from the date the patent is applied for.
70
Catch-up
The prediction that the level of GDP per capita ( or income per capita) in poor countries will grow faster than in rich countries.
71
Property rights
The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it.
72
Rule of law
The ability of a government to enforce laws of the country, particularly with respect to protecting private property and enforcing contracts.
73
Foreign direct investment (FDI)
The purchase or building by a corporation of a facility in a foreign country.
74
Foreign portfolio investment
The purchase by an individual or a firm of stocks or bonds issued in another country.
75
Globalization
The process of countries becoming more open to foreign trade and investment.
76
Aggregate expenditure (AE)
Total spending in the economy: the sum of consumption, planned investment, government purchases, and net exports.
77
Aggregate expenditure model
a macroeconomic model that focuses on the short-run relationship between total sending and real GDP, assuming that the price level is constant.
78
Inventories
Goods that have been produced but not yet sold
79
Asset
Anything of value owned by a person or a firm
80
Liability
Anything owned by a person or a firm.
81
Consumption function
The relationship between consumption spending and disposable income.
82
Autonomous consumption
he level of consumption that occurs no matter what disposable income is.
83
Marginal propensity to consume (MPC)
The scope of the consumption function: The amount b which consumption spending changes when disposable income changes.
84
Marginal propensity to save (MPS)
The amount by which saving changes when disposable income changes.
85
Cash flow
The difference between the cash revenues received by a firm and the cash spending by the firm.
86
Autonomous expenditure
An expenditure that does not depend on the level of GDP.
87
Multiplier
The increase in equilibrium real GDP divided by the increase in autonomous expenditure
88
Multiplier effect
The process y in which an increase in autonomous expenditure leads to a larger increase in real GDP.
89
Aggregate demand (AD) curve
A curve that shows the relationship between the price level and the level of planned aggregate expenditure in the economy, holding constant all other factors that affect aggregate expenditure.
90
Aggregate demand and aggregate supply model
A model that explains short-run fluctuations in real GDP and the price level.
91
Price level
A measure of the average prices of goods services in the economy.
92
Short-run aggregate supply (SRAS) curve
A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms.
93
Monetary policy
The actions the Ban of Canada takes to manage the money supply and the interest rates to pursue macroeconomic policy goals.
94
Fiscal policy
Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
95
Menu costs
The cost to firms of changing prices.
96
Supply Shock
An unexpected event that causes the short-run aggregate supply curve to shift
97
Stagflation
A combination of inflation and recession, usually resulting from a supply shock.

Macroecon (1 decks)

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