Unit 1 Flashcards
What is micro economics
How decisions are made and the consequences of these decisions
What is macro economics
the aggregate behaviour of the economy, on average how households and firms behave
What is the paradox of thrift
in possibility of hard times people reduce spending leading to depressing the economy as a result people end up worse off then they would have been
What are the stages of the business cycle
Recession, depression, expansion, recovery, business cycle peak, business cycle through
What is kaynesian economics
slumps are caused by inadequate spending and can be mitigated by gov spending
What is long run economic growth
sustained upward trend in economies output over time Increases standard of living
A rising aggregate price level is
Inflation
A falling aggregate price level is
deflation
What is a trade deficit
imports > exports
What is a trade surplus
exports > imports
What is an open economy
country that trades goods and services with other countries
What is price stability
means overall price level is changing slowly
What is the relationship between inflation and cash
Discourages people from holding onto cash (cash looses value)
What is the relationship between deflation and cash
Cash gains value leading to more people to hold onto their money, can deepen a recession
What is inflation rate
Inflation rate is annual percent change in aggregate price level
