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Macroecon > Macroecon > Flashcards

Macroecon Flashcards

1
Q

Microeconomics

A

The study of how firms and households make choices, how they interact in the markets, and how the government attempts to influence their choices.

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2
Q

Macroeconomics:

A

The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

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3
Q

Business Cycle

A

Alternating periods of economic expansion and economic recession.

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4
Q

Expansion

A

The period of a business cycle during which total production and total employment are increasing.

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5
Q

Recession

A

The period of a business cycle during which total production and total employment are decreasing.

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6
Q

Economic Growth

A

The ability of an economy to produce increasing quantities of goods and services.

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7
Q

Inflation Rate

A

The percentage increase in the price level from one year to the next.

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8
Q

Gross domestic product (GDP)

A

The market value of all final goods and services produced in a geographic area (country) during a period of time, typically one year.

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9
Q

Final good or service

A

A good or service purchased by a final user.

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10
Q

Intermediate good or service

A

A good or service that is input into another good or service, such as car seats.

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11
Q

Transfer Payments

A

Payments by the government to households for which the government does not receive a new good or service in return.

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12
Q

Expenditure approach

A

Measuring GDP by adding up all the different types of expenditure in the economy.

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13
Q

Income approach

A

Measuring GDP by adding up all the income received by the owners of factors of production.

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14
Q

Gross Operating surplus

A

Payments made to the owners of capital.

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15
Q

Net operating surplus

A

Payments to the owners of capital in excess of depreciation.

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16
Q

Consumption of capital

A

The amount of capital that wears out (depreciates) during use.

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17
Q

Gross mixed income

A

Paid to the owners of small business, this includes payments for labour and capital.

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18
Q

Taxes less subsidies

A

Payments to the government by businesses net of transfers from government to businesses.

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19
Q

Final consumption expenditure

A

Purchases of goods or services that will be used to satisfy individual or community needs and wants.

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20
Q

Gross fixed capital formation

A

Purchases of capital by firms, government, and households.

Net exports: Exports minus imports.

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21
Q

Exports

A

Goods and services produced in Canada that will be consumed by people in other countries.

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22
Q

Imports

A

Goods and services produced by other countries that will be consumed in Canada.

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23
Q

Statistical discrepancy

A

One-half of the difference between the estimates of GDP generated by the expenditure approach and the income approach.

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24
Q

Consumption (C)

A

spending by households on goods and services.

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25
Q

Investments (I)

A

The purchase of capital by firms.

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26
Q

Government spending (G)

A

Spending on consumption goods and capital undertaken by the government.

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27
Q

Value-added

A

The market value a firm adds to a product.

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28
Q

Household production

A

Goods and services people produce for themselves.

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29
Q

Underground economy

A

Buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal.

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30
Q

Nominal GDP

A

The value of final goods and services evaluated at current-year prices.

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31
Q

Real GDP

A

The value of final goods and services evaluated at base-year prices.

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32
Q

Price level

A

A measure of the average prices of goods and services in the economy.

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33
Q

GDP deflator

A

A measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100.

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34
Q

Unemployment rate

A

The percentage of the labour force that is unemployed.

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35
Q

Working-age population

A

People 15 years of age and older who are legally entitled to work in Canada.

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36
Q

Labour force

A

he sum of employed and unemployed workers in the economy.

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37
Q

Labour force participation rate

A

he percentage of the working-age population in the labour force.

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38
Q

Employment-population ratio

A

A measure of the portion of the population engaged in paid work.

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39
Q

Discouraged workers

A

People who are available for work but have not looked or a job during the previous four weeks because they believe no jobs are available for them.

40
Q

Frictional unemployment

A

Short-term unemployment that arises from the process of matching workers with jobs.

41
Q

Structural unemployment

A

Unemployment that arises from a persistent mismatch between the skills and attributes of workers and the requirements of the jobs.

42
Q

Cyclical unemployment

A

Unemployment caused by a business cycle recession.

43
Q

Seasonal unemployment

A

Unemployment that is due to seasonal factors, such as weather or the fluctuation in demand for some products during different times of the year.

44
Q

Natural rate of unemployment

A

The normal rate of unemployment, consisting of frictional unemployment plus structural unemployment.

45
Q

Efficiency wage

A

A higher-than-market wage that a firm pays to increase worker productivity.

46
Q

Inflation

A

A general increase in the prices of goods and services over time.

47
Q

Price level

A

A measure of the average prices of goods and services in the economy.

48
Q

Inflation rate

A

The percentage increase in the price level from one year to the next.

49
Q

Consumer price index (CPI)

A

An average of the prices of the goods and services purchased by a typical household.

50
Q

Producer price index (PPI)

A

An average of the prices received by producers of goods and services at all stages of production.

51
Q

Nominal interest rate

A

The stated interest rate on a loan.

52
Q

Real interest rate

A

The nominal rate minus the inflation rate.

53
Q

Menu costs

A

The costs to firms of changing prices.

54
Q

Log-run economic growth

A

The process by which rising productivity increases the average standard of living.

55
Q

Labour productivity

A

The number of goods and services that can be produced by one worker or by one hour of work.

56
Q

Capital

A

Manufactured goods that are used to produce other goods and services.

57
Q

Potential GDP

A

The level of real GDP attained when all firms are producing at capacity.

58
Q

Financial System

A

The system of financial markets and financial intermediaries through which firms acquire funds from households.

59
Q

Financial markets

A

Market where financial securities, such as stocks and bonds, are bought and sold.

60
Q

Financial Intermediaries

A

Firms such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers.

61
Q

The market for loanable funds

A

The interaction of borrowers and lenders that determines the market interest rate and the number of loanable funds exchanged.

62
Q

Crowding Out

A

A decline I private investment expenditures as a result of an increase in government purchases.

63
Q

Industrial Revolution

A

The application of mechanical power to the production of goods, beginning in England around 1750.

64
Q

Economic growth model

A

A model that explains growth rates in real GDP per capita over the long run.

65
Q

Technological change

A

A change in the quantity of output a firm can produce using a given quantity of inputs.

66
Q

Human Capital

A

The accumulated knowledge and skills that workers acquire from education ad training or from their life experiences.

67
Q

Per-worker production function

A

The relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant.

68
Q

New Growth Theory

A

A model of long-run economic growth that emphasizes that technological change is influenced by economic incentives and so is determined by the working of the market system.

69
Q

Patent

A

The exclusive right to produce a product for a period of 20 years from the date the patent is applied for.

70
Q

Catch-up

A

The prediction that the level of GDP per capita ( or income per capita) in poor countries will grow faster than in rich countries.

71
Q

Property rights

A

The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it.

72
Q

Rule of law

A

The ability of a government to enforce laws of the country, particularly with respect to protecting private property and enforcing contracts.

73
Q

Foreign direct investment (FDI)

A

The purchase or building by a corporation of a facility in a foreign country.

74
Q

Foreign portfolio investment

A

The purchase by an individual or a firm of stocks or bonds issued in another country.

75
Q

Globalization

A

The process of countries becoming more open to foreign trade and investment.

76
Q

Aggregate expenditure (AE)

A

Total spending in the economy: the sum of consumption, planned investment, government purchases, and net exports.

77
Q

Aggregate expenditure model

A

a macroeconomic model that focuses on the short-run relationship between total sending and real GDP, assuming that the price level is constant.

78
Q

Inventories

A

Goods that have been produced but not yet sold

79
Q

Asset

A

Anything of value owned by a person or a firm

80
Q

Liability

A

Anything owned by a person or a firm.

81
Q

Consumption function

A

The relationship between consumption spending and disposable income.

82
Q

Autonomous consumption

A

he level of consumption that occurs no matter what disposable income is.

83
Q

Marginal propensity to consume (MPC)

A

The scope of the consumption function: The amount b which consumption spending changes when disposable income changes.

84
Q

Marginal propensity to save (MPS)

A

The amount by which saving changes when disposable income changes.

85
Q

Cash flow

A

The difference between the cash revenues received by a firm and the cash spending by the firm.

86
Q

Autonomous expenditure

A

An expenditure that does not depend on the level of GDP.

87
Q

Multiplier

A

The increase in equilibrium real GDP divided by the increase in autonomous expenditure

88
Q

Multiplier effect

A

The process y in which an increase in autonomous expenditure leads to a larger increase in real GDP.

89
Q

Aggregate demand (AD) curve

A

A curve that shows the relationship between the price level and the level of planned aggregate expenditure in the economy, holding constant all other factors that affect aggregate expenditure.

90
Q

Aggregate demand and aggregate supply model

A

A model that explains short-run fluctuations in real GDP and the price level.

91
Q

Price level

A

A measure of the average prices of goods services in the economy.

92
Q

Short-run aggregate supply (SRAS) curve

A

A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms.

93
Q

Monetary policy

A

The actions the Ban of Canada takes to manage the money supply and the interest rates to pursue macroeconomic policy goals.

94
Q

Fiscal policy

A

Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

95
Q

Menu costs

A

The cost to firms of changing prices.

96
Q

Supply Shock

A

An unexpected event that causes the short-run aggregate supply curve to shift

97
Q

Stagflation

A

A combination of inflation and recession, usually resulting from a supply shock.

Macroecon (1 decks)

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