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Definition
| deals with the economy as a whole; it examines the behavior of economic aggregates such as aggregate income, consumption, investment, and the overall level of prices |
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| refers to the behavior of all households and firms together |
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| prices that do not always adjust rapidly to maintain the equality between quantity supplied and quantity demanded. |
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| severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s |
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Definition
| believed governments could intervene in the economy and affect the level of output and employment |
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Definition
| Overall price level rises rapidly during periods of recession or high and persistent unemployment |
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| 3 principal variables of concern in macroeconomics |
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Definition
| output growth, unemployment, inflation |
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Definition
| total quantity of goods and services produced in an economy in a given period |
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Term
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Definition
| short term ups and downs of the economy |
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Definition
| period during aggregate output declines. two consecutive quarters of decrease in output signal a recession |
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| prolonged and deep recession becomes a depression |
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Definition
| period in business cycle from a trough up to a peak during which output, inflation and employment rise |
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| contraction, recession, slump |
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Definition
| period in business cycle from a peak down to a trough during which output, inflation, employment fall |
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Definition
| increase in overall price level |
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Definition
| period of rapid increase in overall price level, rare but used to study costs/consequences of moderate inflation |
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Definition
| refers to government policies concerning taxes and spending |
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Term
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Definition
| tools used by Federal Reserve to control quantity of money (and therefore interest rates) in the economy |
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Term
| Growth policies or supply side policies |
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Definition
| government policies that focus on stimulating aggregate supply instead of aggregate demand (Reaganomics, supply side economics). Decrease corporate taxes and regulations thereby lowering production costs |
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Term
| What are the Market Arenas |
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Definition
| Goods-and-services market, labor market, money or financial market |
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Term
| goods and services market |
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Definition
| households and government purchase goods and services. firms supply them |
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Definition
| firms and government purchase (demand) labor from households (supply) |
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Term
| money market or financial market |
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Definition
households purchase stock and bonds from firms. households supply funds with expectations to earn income and demand (borrow) funds from this market.
firms government and rest of world engage in borrowing and lending coordinated by financial institutions |
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Term
| treasury bonds, notes and bills |
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Definition
| promissory notes issued by the federal government when it borrows money |
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Term
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Definition
| promissory notes issued by corporations when they borrow money |
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Term
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Definition
| financial instruments that give the holder a share in firms ownership and therefore a right to share in firm's profits |
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Definition
| portion of a corporations profits that firm pays out each period to its shareholders |
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Definition
| total market value of all final goods and services produced within a given period by factors of production owned by a country's citizens regardless of where the output is produceds |
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Term
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Definition
total market value of all final goods and services produced within a given period by factors of production located within a country.
new good or service must be produced to count |
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Term
| National Incomes and product accounts(NIPA) |
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Definition
| data collected and published by the Bureau of Economic Analysis (BEA), of the Department of Commerce. tracks in detail the various components of national income and output of the US economy. |
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Term
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Definition
expenditure approach:method of computing GDP that measures the total amount spent on all final goods during a given period
income approach-method to compute GDP that measures income, wages, rents, interest, and profits received by all factors of production in producing final goods |
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Term
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Definition
GDP= C + I + G + (EX-IM)
C:consumption-household spending on consumer goods
I:Gross private domestic inverstment-spending by firms and households on new capital: Plant, equipment, inventory, new residential structures
G-Government consumption and gross investment
(EX-IM)Net exports. net spending by rest of world on goods produced in the US |
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Term
| Personal Consumption Expenditures |
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Definition
Durable Goods: goods that last relatively long, cars/appliances
Non durable goods: Goods that are used up fairly quickly, such as food and clothing
Services:Things that do not involve the production of physical things, such as legal services, medical services, and education |
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Term
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Definition
purchase of new capital (equipment or facility)
Stock and bonds DO NOT count-- NO NEW final goods, only changes ownership
used equipment DOES NOT count or new parts made by manufacturer |
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Term
| Gross Private Domestic Investment |
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Definition
| total private sector investment |
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Term
| nonresidential investment |
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Definition
| expenditures by firms for machines, tools, plants |
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Term
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Definition
| expenditures by households and firms on new houses and apartment buildings |
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Definition
computes amount by which firms inventories change during a given period
inventories are the goods that firms produce now but intend to sell later |
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| Government consumption and gross investment (G) |
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Definition
| counts expenditures by federal, state, local governments for final goods and services |
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Term
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Definition
difference between exports and imports
exports sales to foreigners of US produced goods/services
imports are US purchases of goods and services from abroad |
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Term
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Definition
total income earned by the factors of production owned by a country's citizen
GDP=national income + depreciation + (indirect taxes-subsidies) + net factor payments to the rest of world + other |
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Term
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Definition
| percentage of disposable income that is saved |
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Term
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Definition
| GDP measured in current dollars, or current prices we pay for things |
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Definition
| measures how much output changed, ignore changes in price output |
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Definition
leisure increases in social welfare but not counted in GDP
nonmarket and household activites are not counted in GDP even though they amount to real produciton
GDP do not account for environmental damage
nothing about distribution of output
gdp neutral to kind of goods an economy produces |
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Term
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Definition
| unreported economic activity and therefore not counted in GDP |
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Term
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Definition
| GDP converted into dollars using average currency exchange rates over several years adjusted for rates of inflation |
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Term
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Definition
16 years or older
who works for pay for 1 or more hours per week
works 15 hours or more hours for family enterprise
or
who has a job but has been temporarily absent, with or without pay |
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Term
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Definition
16 years or older
not working
available for work and
has made specific efforts to find work during previous four weeks |
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Definition
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Definition
people who want to work but cannot find jobs
stop looking for work and drop out of unemployed and labor force |
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Term
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Definition
| unemployed due to normal working of the labor market; used to denote short run job/skill matching problems |
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Term
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Definition
| portion of unemployed due to changes in the structure of economy that result in a significant loss of jobs in certain industries |
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Term
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Definition
| increase in unemployment that occurs during recessions and depressions |
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Term
| natural rate of unemployment |
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Definition
| unemployment that occurs as a normal part of functioning of the economy--- sometimes sum of frictional unemployment and structural unemployment |
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Term
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Definition
| increase in overall price level |
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Term
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Definition
| decrease in overall price level |
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Term
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Definition
| increase in overall price level that continues over a significant period |
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Term
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Definition
measure overall price levels
all goods and services produced in the economy is the GDP deflator |
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