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Rashid IB Econ. SL Macroeconomics
Standard Level Terms IB Economics - Junior Year
Terms in this set (50)
Total demand for goods and services in an economy.
Total supply of goods and services in an economy.
Circular Flow of Income
A model that describes how economic activity occurs between the different groups in an economy. Saving, taxation and spending on imports represent 'leakages' from the circular flow. Investment, government spending and export revenue represent 'injections' into the circular flow.
Spending on capital equipment, inventories, and structures, including household purchases of new housing.
Gross Domestic Product (GDP)
The dollar amount of all final goods and services produced within a country's borders in a year.
Gross National Product(GNP)
The total value of goods and services, including income received from abroad, produced by the residents of a country within a specific time period, usually one year.
The fee, expressed as a percentage, a borrower owes for the use of a creditor's money.
The total value of all income in a nation (Consumption + Government Spending + Investment + (Exports - Imports)).
Government policy that attempts to manage the economy by controlling taxing and spending.
Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.
Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.
An approach to economics based on supply and demand which depends on economic agents operating rationally based on available info.
The state of the economy declines.
Persistent increase in the average price level in the economy, measured by consumer price index.
Persistent fall in the average level of prices in the economy.
Result of the increase of aggregate demand in the economy.
Result of the increase in costs of production.
Unemployment between jobs.
Unemployment due to seasonal circumstances.
Unemployment due to decrease in factors of production in an area.
Net national product (NNP)
GNP minus depreciation.
The total money value of all final goods and services produced in an economy in one year, not adjusted for inflation.
The total money value of all final goods and services produced in an economy in one year, adjusted for inflation.
Per capita GDP
The total money value of all final goods and services produced in an economy in one year per head of the population.
The growth of real output in an economy over time. It is usually measured as growth in real gross domestic product (GDP).
It is spending by individuals or households on consumer goods and services over a period of time.
It is the addition of capital stock to the economy in the form of factories, offices, machinery and equipment, which is used to produce goods and services.
Any government policy designed to influence the aggregate demand in the economy, thus affecting the average price level and real national output.
Short run aggregate supply (SRAS)
Aggregate supply that varies with the level of demand for goods and services and that is shifted by changes in the costs of factors of production.
Long run aggregate supply (LRAS)
Aggregate supply that is dependent upon the resources in the economy and that can only be increased by improvements in the quantity and/or quality of factors of production.
Government policies designed to shift the long run aggregate supply curve to the right, thus increasing potential output in the economy.
A situation that exists when people of working age, who are willing and able to work, cannot get a job.
Factors of Production
Resources necessary to create goods and services in an economy. Capital - Entrepreneurship - Land - Labour.
Associated with the cyclical downturns in the economy; as the economy moves into a period of slower growth aggregate demand tends to fall as consumers pend less on goods and services. This is likely to lead in the fall of the demand of labour.
Also known as classical unemployment, and is caused by trade unions and government minimum wages interfering with the labour market.
Improvements in the supply side of the economy and/or increased productivity; a shift of the LRAS tom the right.
Federal Reserve System (FED)
Central banking system of the United States which controls the supply of money.
Involves the change in the quantity of money supplied to alter the interest rates. Controlled by the chairman of the FED, currently Ben Bernanke.
Term used to describe the situation when the economy experiences inflation and a recession simultaneously.
Costs of Production
The theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it. The cost can compose any of the factors of production (including labour, capital, or land) and taxation.
Includes stocks in the stock market and the value of your home.
Equilibrium Price Level
The price level that equates aggregate supply and aggregate demand, the average level of prices in the economy.
Exports minus imports.
All government consumption.
Households; work for wages, pay rent, spend income on goods and services.
Businesses/Firms; pays workers wages, pay corporate taxes, invest in capitol, and make goods and provides services.
Contractionary Fiscal Policies
Increase taxes and decrease spending.
Inflationary Fiscal Policies
Decrease taxes and increase spending.
Describing those who are able to work but who are not actively seeking employment because they are discouraged about their prospects for finding employment.
What occurs when the equilibrium quantity of output is above potential output.
Recommended textbook explanations
Gary E. Clayton
Cambridge IGCSE Business Studies
Karen Borrington, Peter Stimpson
Principles of Economics
Explorations in Economics
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