WVHS AP Macroeconomics Flashcards
What is scarcity?
The condition in which our wants are greater than the limited resources available to satisfy those wants
What is a market economy?
An economy that relies chiefly on market forces to allocate goods and resources and to determine prices
What is a command economy?
An economy in which production, investment, prices, and incomes are determined centrally by a government
What are macroeconomics?
The branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (such as the goods and services market) or the entire economy.
What is an opportunity cost?
The most highly valued opportunity or alternative forfeited when a choice is made.
What is specialization?
A method of production where a business or area focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency within the entire system of businesses or areas.
What is trade?
The action of buying and selling goods and services.
What is a comparative advantage?
The situation in which a country can produce a good at lower opportunity cost than another country
What is an absolute advantage?
The ability of a given party, individual or firm to produce more of a good or service than competitors, using the same amount of resources.
What are transfers?
Payments ti persons that are not made in return for goods and services currently supplied.
What is inflation?
An increase in the price level resulting in a depreciation of the value of currency.
What is gross domestic product? (GDP)
The total market value of all the goods and services produced annually within a country’s borders.
What is consumer price index? (CPI)
A widely cited index number for the price level; the weighted average of prices of a specific set of goods and services purchased by a typical household.
What is producer price index? (PPI)
The measure of the average price of a wide range of capital goods.
What is deflation?
Reduction of the general level of prices in the economy.
What is a gross domestic product (GDP) deflator?
The measure of the level of prices of all nee, domestically produced, final goods and services in an economy.
What is natural unemployment?
Unemployment caused by frictional and structural factors in the economy. Natural unemployment rate=frictional unemployment rate and structural unemployment rate.
What is structural unemployment?
The unemployment that occurs when there are more jobs demanded than there are available.
What is frictional unemployment?
The type of unemployment when a worker chooses to leave one job in order to find a better place to employ his skills.
What is cyclical unemployment?
The type of unemployment that goes along with the business cycle. ( When the economy grows, unemployment shrinks and vise-versa)
What is considered full employment?
Is the level of employment rates when there is no cyclical employment
What is aggregate demand?
Is the total demand for the final goods and services in the economy (Y) at a given time and price level
What is aggregate supply?
Is the total supply of goods and services that firms in a national economy plan on selling during a specific time period
What is the business cycle?
A cycle or series of cycles of economic expansion and contraction.
What is the definition of depreciation?
Decrease in the value of a currency relative to other currencies.
Describe monetary policy.
It is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
Describe output in regards of macroeconomics.
In economics it is the quantity of goods or services produced in a given time period, by a firm, industry, or country, whether consumed or used for further production.
According to economist, what is the definition of money?
A common currency; a medium of exchange. An open demand to trade.
What is a fractional reserve banking?
Is the practice whereby a bank retains funds equal to only a portion of the amount of its customers’ deposits as readily available reserves (currency on hand at the bank plus deposit accounts for that bank at the central bank) from which to satisfy demands for payment.
Describe the concept of securities/ bonds.
They are a fixed interest financial asset issued by governments, companies, banks, public utilities and other large entities.
What are loanable funds?
They are the money available in commercial banks and lending institutions available for firms and households to finance expenditures, either investments or consumption.
What is speculation when it comes to a macroeconomic term?
The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain.
Describe open market operations.
Is an activity by a central bank to buy or sell government bonds on the open market. A central bank uses them as the primary means of implementing monetary policy.
What are reserve requirements?
Is a central bank regulation that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves (rather than lend out); required reserves are normally in the form of cash stored physically in a bank vault or deposits made with a central bank.
Describe interest rates.
The percentage of a sum of money charged for its use. i.e. interest rate of a $100 loan is 5%, therefore to pay off the loan, you must pay $105.
What is fiscal policy?
A government policy for dealing with the budget. Example: increase government spending or lower taxes.
What is a deficit?
An excess of expenditure or liabilities over income or assets in a given period of one year.
What is a debt?
The state of owing money, an overall accumulation of many years.
What are expectations referring to the sense of economics?
Is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.
What is considered labor?
The act of using resources into goods.
What is land?
A resource that becomes a good at the end for a final product for the consumer to purchase.
What is physical capital?
A factor of production (or input into the process of production), such as machinery, buildings, or computers.
Explain investment.
The action or process of investing money for profit or material result.
Describe consumption.
The using up of a resource.
What is the definition of exports?
It is the process of sending (goods or services) to another country for sale.
What is the definition of Imports?
It is the process of bringing (goods or services) into a country from abroad for sale.
Explain appreciation of money.
It is a rise in the value of money caused by a fall in the general price.
Explain economics.
The branch of knowledge concerned with the production, consumption, and transfer of wealth.
What is meant by disposable income?
It is income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.
What are sticky wages/ prices?
It refers to when wages/ prices are unmovable or resistant to change.
