Macroeconomics Flashcards
(230 cards)
Recession
Periods when GDP and employment do badly
Inflation
A rise in overall level of prices
Deflation
A fall in overall level of pricesq
GDP
the total value of all final goods and services produced in an economy in a year
How to measure GDP
1) Add up the total value of the production of final goods and services in an economy
Real GDP
The total value of final goods and services produced in an economy in a year calculated as if prices had stayed at the level of some given a base year (Because prices affect GDP, we may want to do an adjustment if we want to track the
output of an economy over time.)
Labor force
Employment + unemployment
Unemployment rate
Number of unemployed workers / labor force
Real wage
Wage rate divided by price level
Real income
Income divided by price level
Shoe-leather costs
High inflation discourages you to hold money and you need to put effort in ways to avoid holding money
Monetary policy
Uses changes in the quantity of money to alter interest rates and affect overall spending
The Fed can set the interest rate by adjusting the money supply up or down
Fiscal policy
Uses changes in government spending and taxes to affect overall spending
taxes,
• government transfers,
• government purchases of goods and services
to shift the aggregate demand curve
Trade deficit
When the value of goods and services bough from foreigners is more than the value of goods and services it sells to them
what are : National income and product accounts
Keep track of the flows of money between different sectors of the economy
Government transfers
Payments by the government to individuals for which no good or service is provided in return
Disposable income
Equal to income plus government transfers minus taxes, is the total amount of household income available to spend on consumption and to save
Government borrowing
Is the total amount of funds borrowed by federal state and local governments in the financial markets
Governemnt purchases of goods and services
Are total expenditures on goods and services by federal state and local governments
Intermediate goods and services
Goods and services bough from one firm by another firm - that are inputs for productive or final goods and services
Aggregate spending
The sum of consumers spending, investment spending, government purcahses of goods and services, and exports minus imports is the total spending on domestically produced final goods and services in the economy
Value added (of a producer)
The value of its sales minus the value of its purchases of intermediate goods and services
What is included in the GDP
Domestically produced final goods and services, including capital goods, new construction of structures and changes to inventories
Aggregate output
The economies total quantity of output of final goods and services