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| The study of economic activity and prices in the overall economy of a nation or region. |
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| Looks at behavior of individual firms, households, or markets. |
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| A logical framework to explain a particular economic phenomenon |
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A simplified representation of the economic phenomenon that takes a mathematical or graphical form.
Explain/ illustrate a complex economic concept through a mathematical or graphical form. |
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| 5 Steps of a Economic theory or model |
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1. Identify an interesting economic question. (EX: why is U going up or down)
2.Specify the variables to be explained by the model, as well as the variables that explain them. |
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| A set of factors not explained by the model that are used to explain the endogenous variables. |
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| A variable that a macroeconomics wants to explain inside his or her model. |
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| Real GDP (Real Gross Domestic Product) |
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Measures the output of actual goods and services produced in an economy over a fixed period, usually a year.
*Real GDP also equals the total amount of real income of every person and firm in the economy. |
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| Represents recurrent up and down movements in economic activity that differ in how regular they are. |
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| When economic activity declines and real GDP per person falls. |
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| When decline of real GDP is severe. |
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Measures the percentage of workers looking for work, but do not have jobs, at a particular point in time.
Unemployment Rate = Unemployment total/labor force * 100
3 requirements
Not Working
Able to work
Looking for work |
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| Shows us how rapidly the overall level of prices is rising. |
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Extremely high inflation
Ex Zimbabwe |
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| Government Budget Deficits |
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An excess of government spending relative to revenue
Ex 2007-2009 |
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| Policy makers decision to raise taxes, cut government spending or both |
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The job of keeping inflation in check is a core responsibility. Along with the US Federal Reserve.
Central Banks oversee banking systems |
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| A large scale disruption in financial markets characterized by sharp declines in prices of assets (Property that includes bonds, stocks,art land etc)and business failures. |
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| Property that includes bonds, stocks,art land etc |
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| A goal of macroeconomics in which attempts to minimize business cycle fluctuations and stabilize economic activity. |
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