How can we help?

You can also find more resources in our Help Center.

46 terms

Introduction to Macroeconomics

Circular Flow, GDP
STUDY
PLAY
Business Cycle
The short-run alternation between economics downturns and upturns (recessions and expansions
Depression
A very deep and prolonged downturn
Recession
A period of economics downturn when output and employment are falling
Expansion
A.k.a. Recovery, A period of upturn when output and employment are falling
Employment
Total number of people currently employed in the economy
Unemployed
Total number of people currently looking for work but not currently employed
Unemployment rate
Percentage of labor force that is unemployed
Labor Force
The sum of employment and unemployment
Output
The quantity of goods and services produced
Aggregate Output
The economy's total production of goods and services for a given time period
Inflation
A rise in overall price level
Deflation
A fall in overall price level
Price Stability
Aggregate price level is changing only slowly
Economic Growth
An increase in the maximum possible output of an economy
Model
A simplified representation used to better understand a real-life situation
Ceteris Paribus
All other things equal, or all other relevant factors remain unchanged
National Income and Product Accounts
Keep track of flows of money between different sectors of the economy
National Accounts
National Income and Product Accounts
Household
Either an individual or group of people who share their income
Firm
An organization that produces goods and services for sale or employs members of a household
Product Markets
Where goods and services are bought and sold
Factor Markets
Where resources, especially capital and labor, are bought and sold
Consumer Spending
A household spending on goods and services
Stock
a share in the ownership of a company help by a stakeholder
Bond
a loan in the form of an IOU that pays interest
Government Transfers
payments that the government makes to individuals without expecting a good or service in return
Disposable Income
Income + Government Transfers- Taxes
Private Savings
Disposable Income-Consumer Spending
Financial Markets
The banking, stock, and bond markets, which channel private savings and foreign lending to investment spending, government borrowing, and foreign borrowing
Government Borrowing
The amount of funds borrowed by the government in the financial markets
Government purchases of goods and services
Total expenditures on goods and services by federal, state, and local governments
Exports
Goods and services sold to other countries
Imports
Goods and services purchased from other countries
Inventories
Stocks of goods and raw materials held to facilitate business operations
Investment Spending
Spending on new, productive physical capital and on changes in inventories
Final Goods and Services
Goods and services sold to the final, or end, user
Intermediate Goods and Services
Goods and services bought by one and sold to another
Gross Domestic Product (GDP)
total value of all final goods and services produced in an economy during a given period
Aggregate spending
Total spending on domestically produced final goods and services in the economy, = sum of consumer spending, investment spending, government purchases of goods and services, and exports minus imports (C + I + G + (X-IM))
Value Added
Value of sales minus value of purchases of inputs
Net Exports
The difference between the value of the imports and the exports(X-IM)
Real GDP
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year (Q x P at base year prices)
Aggregate Output
The total quantity of final goods and services produced within an economy
Nominal GDP
The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced
Chain-Linking
The method of calculating changes in real GDP using the average between the growth rate calculated using an early base year and the growth rate calculated using a late base year
GDP per capita
GDP divided by the size of the population; is equal to the average GDP per person