Quiz Six Flashcards
If structural unemployment falls, natural rate of employment
Rises
Recession
Significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP
Peak
End of an expansion, with recession starting next month
Trough
End of a recession, expansion starts next month
Business cycle
Cycle of expansions and recession
What happens to real GDP in a recession
Drops due to a decline in economic activity
Depressions
Severe economic recession
Interest rate
Rate at which we borrow and lend
Federal Reserve
US central bank
The Fed’s dual mandate
Effectively promote the goals of maximum employment, stable prices, and mandate long term interest rates
Monetary policy and COVID
Federal funds interest rate was about 0 and stayed there until max employment resolved
Monetary policy
Actions the federal reserve takes to manage the money supply and interest rates
Fiscal policy
Changes in federal taxes and purchases that are intended to achieve macro policy objectives
Aggregate demand curve
Shows relationship between the price level and quantity of rGDP demanded by households, firms, and the government
Short term aggregate supply curve
Shows short term relationship between price level and quantity of rGDP supplied by firms