Unit 4: Macroeconomics Flashcards
How many main ideas are there in unit 4?
In my opinion, there are 4 main ideas:
- Firstly, it talks about THE DEFINITION of macroeconomics:
- Secondly, it mentions The GOAL of Macroeconomics:
- Thirdly, it talks about TWO MACROECONOMIC POLICIES:
- MONETARY POLICY:
- FISCAL POLICY:
- Finally, it talks about the DIFFERENCES BETWEEN MICROeconomics and MACROeconomics.
What is macroeconomics?
macroeconomics is a branch of economics that studies the economic activity of an entire country and economy-wide phenomena.
what is the goal of macroeconomics?
Macroeconomics looks at overall economic trends such as employment levels, economic growth, the balance of payment, inflation and so on.
what does the term “economic trends” mean?
The overall direction in which a nation’s economy is moving.
What does the term “employment levels” mean?
it’s the percentage of the labor force that is employed.
what is economic growth?
Economic growth
- is an increase in the capacity of an economy to produce goods and services,
- compared from one period of time to another.
What does the term “balance of payments” mean? (BOP)
BOP is a record of all payments or monetary transactions
- between a particular country and other nations
- during a specific time period.
what does the term “inflation” mean?
Inflation is:
- the general increase in prices
- and fall in the purchasing value of money.
What are two major macroeconomic policies?
they are monetary policy and fiscal policy.
What is the (definition of) monetary policy?
Monetary policy
- which controls a nation’s money supply
- is supervised by EACH COUNTRY’S CENTRAL BANK.
What is the Money supply?
(it vao)
is the total value of monetary assets available in an economy at a specific time.
what is Fiscal policy?
Fiscal policy
- which controls a GOVERNMENT’S REVENUE and SPENDING
- is in the hand of the Ministry of Finance.
What is the government’s revenue?
is money received from sources such as taxes and non-taxable sources by a government.
What are the main objectives of these two main macroeconomic policies?
they are:
- to PROMOTE economic growth
- and to KEEP INFLATION UNDER CONTROL.
What are the main tools of monetary policy?
They are:
- open market operations
- the discount rate
- and reserve requirement.
what are the main tools of fiscal policy?
They are:
- taxes,
- and government’ s spending
How does the central bank control the economy?
by increasing or decreasingg the money supply.
what purpose does the central bank work for?
the central bank works to keep the economy from:
- overheating ( leads to inflation)
- or slowing down (leads to unemployment) too quickly.
What did a nation’s economic health is influenced by?
It is influenced by Governmental fiscal policies, such as taxation, spending and government borrowing.
What’s the difference between macro and micro?
What is GDP?
GDP is the total value of ALL goods and services produced BY A COUNTRY in A YEAR.
What is the difference between GDP and GNP?
GNP= GDP + net property income from abroad
Why is it said that microeconomics and macroeconomics are interdependent and complement one another?
Can you Give an example to clarify what you just said?
- because there are many overlapping issues between the two fields.
- For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product’s price charged to the public.
What does the term “Interest rate” mean?
Interest rate is the percentage rate per year that is paid by borrowers to lenders.
