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Macroeconomics > Chapter 10, 11, 12 > Flashcards

Chapter 10, 11, 12 Flashcards

1
Q

Okun’s Law

A

The negative relationship between unemployment and GDP

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2
Q

Leading Indicators

A

Variables that tend to fluctuate in advance of the overall economy

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3
Q

Aggregate Demand

A

The relationship between the quantity of output demanded and the aggregate price level

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4
Q

Aggregate Supply

A

The relationship between the quantity of goods and services supplied and the price level

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5
Q

Shocks

A

Exogenous events that cause the curves to shift

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6
Q

Demand Shocks

A

A shock that shifts the aggregate demand curve

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7
Q

Supply Shocks

A

A shock that shifts the aggregate supply curve

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8
Q

Stabilization Policy

A

To refer to policy actions aimed at reducing the severity of short run economic fluctuations

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9
Q

IS-LM Model

A

The leading interpretation of Keynes theory

The goal is to show what determines national income for a given price level

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10
Q

IS Curve

A

Stands for Investment and Savings

Represents what’s going on in the market for goods and services

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11
Q

LM Curve

A

Stands for Liquidity and Money

Represents what’s happening to the supply and demand for money

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12
Q

Keynesian Cross

A

Simplest interpretation of Keynes’s theory of how national income is determined and is a building block for the more complex and realistic IS-LM model

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13
Q

Government Purchases Multiplier

A

The ratio of change in Y over change in G

It tells us how much income rises in response to a $1 increase in government purchases

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14
Q

Tax Multiplier

A

The amount income changes in response to a $1 change in taxes

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15
Q

Theory of Liquidity Preference

A

The interest rate adjusts to balance the supply and demand for money

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16
Q

Monetary Transmission Mechanism

A

How a monetary expansion induces greater spending on goods and services

17
Q

Pigou Effect

A

When falling prices expand income

18
Q

Debt-Deflation Theory

A

Describes the effects of unexpected falls in the price level

19
Q

Liquidity Trap

A

Aggregate demand, production, and employment may be trapped at low levels

20
Q

Fisher Effect

A

The relationship between inflation and real and nominal interest rates
Real interest rate = nominal - inflation

21
Q

Zero Lower Bound

A

Another name for liquidity trap

22
Q

Forward Guidance

A

How banks communicate what their future monetary policy will be

23
Q

Quantitative Easing

A

Unconventional monetary policy where a central bank purchases government securities in order to lower interest rates and increase money supply

Macroeconomics (10 decks)

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