Macroeconomics Concepts

loanable funds

1: The term itself includes all forms of credit, such as loans, bonds, or savings deposits. In economics, the loanable funds doctrine is a theory of the market interest rate. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. 2: simple supply-demand model of the financial system where demand is investment, and supply is saving

Demand Deposit

A demand deposit consists of funds held in an account from which deposited funds can be withdrawn at any time from the depository institution, such as a checking or savings account, accessible by a teller, ATM or online banking.

crowding out effect

A situation when increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total investment spending. https://www.youtube.com/watch?v=HRYaXktH_O4

Currency deprecation and apperciation

Currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system in which no official currency value is maintained.[1] Currency appreciation in the same context is an increase in the value of the currency.

Balance of Payments (BOP)

is a statement of all transactions made between entities in one country and the rest of the world over a defined period of time, such as a quarter or a year.

Tariff

is a tax on imports or exports between sovereign states. they are used to restrict imports by increasing the price of goods and services purchased from overseas and making them less attractive to consumers

Trade Deficit

is an economic measure of international trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (BOT).

Gross National Product

is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country's residents. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.

Economic Growth

is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. It can be measured in nominal or real terms, the latter of which is adjusted for inflation. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.

Marginal Product of Labor (MPL)

The extra output the firm can produce using an additional unit of labour

trade surplus

an economic measure of a positive balance of trade, where a country's exports exceed its imports. A trade surplus represents a net inflow of domestic currency from foreign markets and is the opposite of a trade deficit, which represents a net outflow. Balancing international trade is an important economic factor for a country; when a nation has a trade surplus, its exports exceed its imports during a specified period of time.

Excess reserves

are capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors or internal controls. For commercial banks, excess reserves are measured against standard reserve requirement amounts set by central banking authorities.

Central Bank

is an institution that manages a state's currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency,[1] which usually serves as the state's legal tender. Central banks also act as a "lender of last resort" to the banking sector during times of financial crisis. Most central banks usually also have supervisory and regulatory powers to ensure the solvency of member institutions, prevent bank runs, and prevent reckless or fraudulent behavior by member banks. Also called "Reserve bank" "monetary authority"

Foreign direct investment (FDI)

is an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies.

Labour unions / Trade unions

is an organization that represents the collective interests of workers. Workers unite to negotiate with employers over wages, hours, benefits and other working conditions. Labor unions are often industry-specific and tend to be more common in manufacturing, mining, construction, transportation, and the public sector.

Liquid Asset

is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted into cash is similar to cash itself because the asset can be sold with little impact on its value.

asset demand for money

is the demand for highly liquid financial assets — domestic money or foreign currency — that is not dictated by real transactions such as trade or consumption expenditure. Speculative demand arises from the perception that money is optimally part of a portfolio of assets being held as investments.

demand for money

is the desired holding of financial assets in the form of money: that is, cash or bank deposits rather than investments. It can refer to the demand for money narrowly defined as M1 (directly spendable holdings), or for money in the broader sense of M2 or M3. In macroeconomics motivations for holding one's wealth in the form of M1 can roughly be divided into the transaction motive and the precautionary motive.

Balance Of Trade (BOT)

is the difference between the value of a country's imports and exports for a given period. The balance of trade is the largest component of a country's balance of payments. Economists use the BOT to measure the relative strength of a country's economy. The balance of trade is also referred to as the trade balance or the international trade balance.

Marginal propensity to save (MPS)

is the extra saving generated by an extra dollar of disposable income.

minimum wage

is the lowest remuneration that employers can legally pay their workers to achieve a decent standard of living.

M1 Money

is the money supply that includes physical currency and coin, demand deposits, travelers checks, other checkable deposits and negotiable order of withdrawal (NOW) accounts. The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be quickly converted to cash. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly.

Net capital outflow (NCO)

is the net flow of funds being invested abroad by a country during a certain period of time (usually a year). A positive NCO means that the country invests outside more than the world invests in it and vice versa.

Reserve Ratio

is the portion of depositors' balances that banks must have on hand as cash. This is a requirement determined by the country's central bank, which in the United States is the Federal Reserve. The reserve ratio affects the money supply in a country at any given time.

Fractional-reserve banking

is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities.[1] Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide. it allows banks to act as financial intermediaries between borrowers and savers, and to provide longer-term loans to borrowers while providing immediate liquidity to depositors (providing the function of maturity transformation).

inlfation

is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Monetary base or M0

is the total amount of a currency that is either in general circulation in the hands of the public or in the commercial bank deposits held in the central bank's reserves. This measure of the money supply typically only includes the most liquid currencies; it is also known as the "money base."

marginal tax rate

the extra tax that is paid per dollar of additional income.

Unemployment insurance / compensation

-Unemployment compensation is paid by the state to unemployed workers who have lost their jobs due to layoffs or retrenchment. Unemployment compensation is meant to provide a source of income for jobless workers until they can find employment. In order to be eligible for it, certain criteria must be satisfied by an unemployed worker, such as having worked for a minimum stipulated period and actively looking for employment. Unemployment compensation provides partial income replacement only for a defined length of time or until the worker finds employment, whichever comes first. It's also known as unemployment insurance or unemployment benefits. -Workers may receive benefits from unemployment insurance if they have faultlessly lost their jobs and meet other eligibility criteria. Workers who voluntarily terminate employment, and those who are self-employed, are not eligible for unemployment insurance and must use personal funds to cover situations when no work is available. State governments pay unemployment insurance from a fund of unemployment taxes collected from employers.

Contractionary Monetary Policy

1: Contractionary monetary policy is when the Federal Reserve slows economic growth to prevent inflation. If not exercised with care, it could push the economy into a recession. It is also called restrictive monetary policy. 2: The opposite of expansionary monetary policy is contractionary monetary policy, which maintains short-term interest rates higher than usual or which slows the rate of growth in the money supply or even shrinks it. This slows short-term economic growth and lessens inflation. https://www.youtube.com/watch?v=bv-uNNkE39I

Supply-side economics

1:is a macroeconomic theory that argues economic growth can be most effectively created by lowering taxes and decreasing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices and employment will increase. 2:emphasizes incentives and tax cuts as a means of increasing economic growth.

liquidity trap

1: is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers [holding] cash [rather than] holding a debt which yields so low a rate of interest." A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. According to mainstream theory, among the characteristics of a liquidity trap are interest rates that are close to zero and changes in the money supply that fail to translate into changes in the price level.

Fisher effect

1: is an economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and nominal interest rates. The Fisher effect states that the real interest rate equals to the nominal interest rate minus the expected inflation rate. 2:The tendency for nominal interest rates to be high when inflation is high and low when inflation is low. Allows lenders to make changes to their interest rates based on inflation. Ex: If inflation has been high recently, lenders anticipate that it will continue to be high, so they raise the nominal interest rate so that the real rate of return is not affected

Money Multiplier

1: is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend. Banking reserves is the ratio of reserves to the total amount of deposits. ***notice similarity with multiplier effect. 2: is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system.[1] Most often, it measures an estimate of the maximum amount of commercial bank money that can be created, given a certain amount of central bank money. That is, in a fractional-reserve banking system, the total amount of loans that commercial banks are allowed to extend (the commercial bank money that they can legally create) is equal to an amount which is a multiple of the amount of reserves. This multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.

Infrastructure

1: is the fundamental facilities and systems serving a country, city, or other area, including the services and facilities necessary for its economy to function. 2: social overhead capital and large-scale public projects. 3: the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise.

natural rate of Interest (NRI)

1: is the rate that supports the economy at full employment/maximum output while keeping inflation constant 2: is the rate at which real GDP is growing at its trend rate, and inflation is stable.

Bank run

1: occurs when a large number of customers of a bank or another financial institution withdraw their deposits simultaneously due to concerns about the bank's solvency. As more people withdraw their funds, the probability of default increases, thereby prompting more people to withdraw their deposits. In extreme cases, the bank's reserves may not be sufficient to cover the withdrawals. 2: occurs when a large number of people withdraw their money from a bank, because they believe the bank may cease to function in the near future. In other words, it is when, in a fractional-reserve banking system (where banks normally only keep a small proportion of their assets as cash), a large number of customers withdraw cash from deposit accounts with a financial institution at the same time because they believe that the financial institution is, or might become, insolvent; and keep the cash or transfer it into other assets, such as government bonds, precious metals or gemstones.

production function

1: relates quantities of physical output of a production process to quantities of physical inputs or factors of production. The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors, while abstracting away from the technological problems of achieving technical efficiency, as an engineer or professional manager might understand it. In macroeconomics, aggregate production functions are estimated to create a framework in which to distinguish how much of economic growth to attribute to changes in factor allocation (e.g. the accumulation of physical capital) and how much to attribute to advancing technology. 2: Y=F(K,L) Shows how much output (Y) the economy can produce from K units of capital and L units of labour; reflects the economy's level of technology; exhibits constant returns to scale

Treasury bill (T-Bill)

1:is a short-term debt obligation backed by the Treasury Dept. of the U.S. government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million. T-bills have various maturities and are issued at a discount from par. 2: Short-term (usually less than one year, typically three months) maturity promissory note issued by a national (federal) government as a primary instrument for regulating money supply and raising funds via open market operations. Issued through the country's central bank, T-bills commonly pay no explicit interest but are sold at a discount, their yield being the difference between the purchase price and the par-value (also called redemption value). This yield is closely watched by financial markets and affects the yield on municipal and corporate bonds and bank interest rates. Although their yield is lower than on other securities with similar maturities, T-bills are very popular with institutional investors because, being backed by the government's full faith and credit, they come closest to a risk free investment.

Marginal propensity to import (MPM)

1:is the amount imports increase or decrease with each unit rise or decline in disposable income. The marginal propensity to import is thus the change in imports induced by a change in income 2:the increase in the dollar value of imports that results from a dollar increase in GDP

optimal currency area (OCA)

1:is the geographic area in which a single currency would create the greatest economic benefit. While traditionally each country has maintained its own separate, national currency, work by Robert Mundell in the 1960s theorized that this may not be the most efficient economic arrangement. In particular, countries that share strong economic ties may benefit from a common currency. This allows for closer integration of capital markets and facilitates trade. However, a common currency results in a loss of each country's ability to direct fiscal and monetary policy interventions to stabilize their individual economies. 2: a group of regions that has high labor mobility or has common and synchronous aggregate supply or demand shocks

Discount Rate

1:the minimum interest rate set by the US Federal Reserve (and some other national banks) for lending to other banks. 2:The discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. The discount rate also refers to the interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

public-choice theory

A branch of economics and political science that studies the way that governments make decisions.Examines the way different voting mechanisms can function and shows that there are no ideal mechanisms to sum up individual preferences into social choices. Analyzes government failures.

Seasonal Unemployment

An elevated level of unemployment that is expected to occur at certain parts of the year. For instance, amusement parks may experience seasonal unemployment during the winter months because less people will visit the parks during this time.

diminishing marginal returns

As one input is increased (holding other inputs constant), its marginal product falls. If L increases while holding K fixed machines per worker falls, worker productivity falls.

Quota

a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period.

M2 Money

is a calculation of the money supply that includes all elements of M1 as well as "near money." M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds and other time deposits. These assets are less liquid than M1 and not as suitable as exchange mediums, but they can be quickly converted into cash or checking deposits.

reserve requirement

is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum amount of reserves that must be held by a commercial bank. The minimum reserve is generally determined by the central bank to be no less than a specified percentage of the amount of deposit liabilities the commercial bank owes to its customers.

M3 Money

is a measure of the money supply that includes M2 as well as large time deposits, institutional money market funds, short-term repurchase agreements and larger liquid assets. The M3 measurement includes assets that are less liquid than other components of the money supply and are referred to as "near, near money," which are more closely related to the finances of larger financial institutions and corporations than to those of small businesses and individuals.

Fixed Exchange Rate

is a regime applied by a country whereby the government or central bank ties the official exchange rate to another country's currency or the price of gold. The purpose of a fixed exchange rate system is to keep a currency's value within a narrow band.

floating exchange rate

is a regime where the currency price is set by the forex market based on supply and demand compared with other currencies. This is in contrast to a fixed exchange rate, in which the government entirely or predominantly determines the rate.

Expansionary monetary policy

is when a central bank uses its tools to stimulate the economy. That increases the money supply, lowers interest rates, increases aggregate demand and decreasing reserve ratio. https://www.youtube.com/watch?v=bv-uNNkE39I

Capital Account

shows the net change in physical or financial asset ownership for a nation and, together with the current account, constitutes a nation's balance of payments. The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account. A capital account may also refer to an account showing the net worth of a business at a specific point in time.

Current Account

records a nation's transactions with the rest of the world - specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments - over a defined period of time, such as a year or a quarter.

Open market operations (OMO)

refer to the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Securities' purchases inject money into the banking system and stimulate growth, while sales of securities do the opposite and contract the economy.

Transaction demand for money

refers specifically to money narrowly defined to include only its most liquid forms, especially cash and checking account balances. This form of money demand arises from the absence of perfect synchronization of payments and receipts. The holding of money is to bridge the gap between payments and receipts. The transactions demand for money is motivated by the need to facilitate daily transactions by consumers, businesses, and governments.

effective tax rate

total taxes divided by total income.

Commodity Money

1: Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects that have value in themselves (intrinsic value) as well as value in their use as money. Example of commodities that have been used as mediums of exchange include gold, silver, copper, salt, peppercorns, tea, large stones (such as Rai stones), decorated belts, shells, alcohol, cigarettes, cannabis, silk, candy, nails, cocoa beans, cowries and barley. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or price system economies.

Liquidity

1: In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset's price. 2: Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. Market liquidity refers to the extent to which a market, such as a country's stock market or a city's real estate market, allows assets to be bought and sold at stable prices. Cash is considered the most liquid asset, while real estate, fine art and collectibles are all relatively illiquid. Accounting liquidity measures the ease with which an individual or company can meet their financial obligations with the liquid assets available to them.

efficiency wage theory

1: In labor economics, this theory/hypothesis argues that wages, at least in some markets, form in a way that is not market-clearing. Specifically, it points to the incentive for managers to pay their employees more than the market-clearing wage in order to increase their productivity or efficiency, or reduce costs associated with turnover, in industries where the costs of replacing labor are high. This increased labor productivity and/or decreased costs pay for the higher wages. 2: focuses on the fact that firms are willing to pay above market-clearing wages as a way to motivate labor and it suggests that paying employees higher wages may induce them to work harder

Interest Rate

1: Interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). The assets borrowed could include cash, consumer goods, and large assets such as a vehicle or building. 2: is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.

Reflation

1: It can refer to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output. 2: is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle. It is the opposite of disinflation, which seeks to return the economy back down to the long-term trend.

Say's law

1: a law stating that supply creates its own demand. 2: when an economy produces a certain level of real GDP, it also generates the income needed to purchase that level of real GDP. In other words, the economy is always capable of demanding all of the output that its workers and firms choose to produce. Hence, the economy is always capable of achieving the natural level of real GDP. 3: Say's law of markets is a classical economic theory that says that production is the source of demand.

Recession

1: a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. [Dictionary] 2: is a significant decline in economic activity that goes on for more than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)

cyclical unempolyment

1: also called deficient-demand, or Keynesian unemployment, occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and mass unemployment results.

real wage

1: are wages adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought. This term is used in contrast to nominal wages or unadjusted wages. Because it has been adjusted to account for changes in the prices of goods and services, real wages provide a clearer representation of an individual's wages in terms of what they can afford to buy with those wages - specifically, in terms of the amount of goods and services that can be bought.

Sticky Wages Theory

1: are when workers' earnings don't adjust quickly to changes in labor market conditions. That can slow the economy's recovery from a recession. 2: hypothesizes that pay of employees tends to have a slow response to the changes in the performance of a company or of the economy. According to the theory, when unemployment rises, the wages of those workers that remain employed tend to stay the same or grow at a slower rate than before rather than falling with the decrease in demand for labor. Specifically, wages are often said to be sticky-down, meaning that they can move up easily but move down only with difficulty. - also called Nominal rigidity, also known as price-stickiness or wage-stickiness. 3: describes a situation in which the nominal price is resistant to change. Complete nominal rigidity occurs when a price is fixed in nominal terms for a relevant period of time. For example, the price of a particular good might be fixed at $10 per unit for a year. Partial nominal rigidity occurs when a price may vary in nominal terms, but not as much as it would if perfectly flexible

Natural rate of unemployment NRU

1: defines the level at which unemployment will remain, no matter how great the effects of monetary policy. The only way to permanently keep unemployment under its natural rate is to resort to higher and higher inflation rates, which in turn would be highly hazardous for the economy. This can be easily understood using an expectations-augmented Phillips curve. http://policonomics.com/natural-rate-of-unemployment/ 2: is a combination of frictional, structural, and surplus unemployment. Even a healthy economy will have this level of unemployment because workers are always coming and going, looking for better jobs. This jobless status, until they find that new job, is the natural rate of unemployment. The Federal Reserve estimates this rate to be between 4.5 percent and 5.0 percent.

Nominal GDP

1: economic output without the inflation adjustment. [investopedia]

Real GDP

1: equal to the economic output adjusted for the effects of inflation [investopedia] 2: macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. [wiki] 3: is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as "constant-price," "inflation-corrected" GDP or "constant dollar GDP."

Cost Push Inflation

1: inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods. 2: is a situation in which the overall price levels go up (inflation) due to increases in the cost of wages and raw materials. Cost-push inflation develops because the higher costs of production factors decreases in aggregate supply (the amount of total production) in the economy.

Nominal Interest Rate

1: interest rate before taking inflation into account. Nominal can also refer to the advertised or stated interest rate on a loan, without taking into account any fees or compounding of interest.

Structural unemployment

1: is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap). Structural unemployment is often brought about by technological changes that make the job skills of many of today's workers obsolete. 2: is a type of long-term unemployment caused by shifts in the economy. It occurs when there is an oversupply of jobs and people are willing to work, but the people searching for work are not qualified for these jobs. Some causes of structural unemployment are technological advances and decline in an industry.

foreign exchange market

1: is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the bond market. [also called Forex, FX, or currency market] 2:is the market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered the largest financial market in the world.

Labour force participation rate, LFPR, Economic activity rate, EAR

1: is a measure of the active portion of an economy's labor force. It refers to the number of people who are either employed or are actively looking for work. During an economic recession, many workers often get discouraged and stop looking for employment, resulting in a decrease in the participation rate. [https://www.investopedia.com/terms/p/participationrate.asp#ixzz5EkOSs4EN ] 2: is the percentage of the population, both employed and unemployed, that constitutes the manpower supply of the labor market, regardless of their current labor status. [wiki]

commodity market

1: is a physical or virtual marketplace for buying, selling and trading raw or primary products, and there are currently about 50 major commodity markets worldwide that facilitate investment trade in approximately 100 primary commodities. Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (such as gold, rubber and oil), whereas soft commodities are agricultural products or livestock (such as corn, wheat, coffee, sugar, soybeans and pork).

stagflation

1: is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. 2: A condition of slow economic growth and relatively high unemployment - economic stagnation - accompanied by rising prices, or inflation, or inflation and a decline in Gross Domestic Product (GDP).

Full Empolyment output also Full Empolyment GDP

1: is a term used to describe an economy that is operating with an ideal and efficient level of employment, where economic output is at its highest potential. When the economy is at full employment, aggregate demand is equal to aggregate supply. ***notice similarity with potential GDP: from Khan academy: Potential GDP, or full-employment GDP, is the maximum quantity that an economy can produce given full employment of its existing levels of labor, physical capital, technology, and institutions. 2: is the production level (RGDP) when all available resources are used efficiently. It equals the highest level of production an economy can sustain for the long-run. It is also referred to as the full employment production, natural level of output or long-run aggregate supply.

Keynesian economics

1: is an economic theory of total spending in the economy and its effects on output and inflation. advocated increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Subsequently, Keynesian economics was used to refer to the concept that optimal economic performance could be achieved -- and economic slumps prevented - by influencing aggregate demand through activist stabilization and economic intervention policies by the government. Keynesian economics is considered a "demand-side" theory that focuses on changes in the economy over the short run.

Potential GDP

1: is an economy's maximum, ideal production with high employment across all sectors and maintaining currency and product price stability. http://www.businessdictionary.com/definition/GDP-Gap.html 2: the highest level of real gross domestic product (potential output) that can be sustained over the long term. (wiki) 3: the level of output that an economy can produce at a constant inflation rate. Although an economy can temporarily produce more than its potential level of output, that comes at the cost of rising inflation. https://stats.oecd.org/glossary/detail.asp?ID=2094

Output Gap

1: is an indicator of the difference between the actual output of an economy and the maximum potential output of the economy expressed as a percentage of gross domestic product (GDP). A country's output gap may be either positive or negative. A negative output gap indicates that actual economic output is below the economy's full capacity for output while a positive output indicates an economy that is outperforming expectations because its actual output is higher than the economy's recognized maximum capacity output. https://www.investopedia.com/terms/o/outputgap.asp#ixzz5EkKNFJUH 2: The calculation for the output gap is Y-Y* where Y is actual output and Y* is potential output. If this calculation yields a positive number it is called an inflationary gap and indicates the growth of aggregate demand is outpacing the growth of aggregate supply—possibly creating inflation; if the calculation yields a negative number it is called a recessionary gap—possibly signifying deflation. (also called GDP gap)

Demand-pull inflation

1: is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods." 2: Demand-pull inflation is when aggregate demand for a good or service outstrips aggregate supply. It starts with an increase in consumer demand. Typically, sellers meet such an increase with more supply. But when additional supply is unavailable, sellers raise their prices. That results in demand-pull inflation.

Fiat Money

1: is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and many other major world currencies. This approach differs from money whose value is underpinned by some physical good such as gold or silver, called commodity money. 2: is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on the faith and credit of the economy.

Stock Market

1: is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as those only traded privately. Examples of the latter include shares of private companies which are sold to investors through equity crowdfunding platforms. Stock exchanges list shares of common equity as well as other security types, e.g. corporate bonds and convertible bonds. [also called equity market, share market] 2: refers to the collection of markets and exchanges where the issuing and trading of equities or stocks of publicly held companies, bonds, and other classes of securities take place. This trade is either through formal exchanges or over-the-counter (OTC) marketplaces. Also known as the equity market, the stock market is one of the most vital components of a free-market economy. It provides companies with access to capital in exchange for giving investors a slice of ownership

The Business Cycle

1: is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend.[1] The length of a business cycle is the period of time containing a single boom and contraction in sequence. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions or booms), and periods of relative stagnation or decline (contractions or recessions). [wiki] also called economic cycle or trade cycle. 2: describes the rise and fall in production output of goods and services in an economy. Business cycles are generally measured using rise and fall in real - inflation-adjusted - gross domestic product (GDP), which includes output from the household and nonprofit sector and the government sector, as well as business output. "Output cycle" is therefore a better description of what is measured. The business or output cycle should not be confused with market cycles, measured using broad stock market indices; or the debt cycle, referring to the rise and fall in household and government debt. [https://www.investopedia.com/terms/b/businesscycle.asp#ixzz5EkMu0aZ6] 2:

The multiplier effect

1: is the expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is the money used to create more money and is calculated by dividing total bank deposits by the reserve requirement 2: Every time there is an injection of new demand into the circular flow there is likely to be a multiplier effect. This is because an injection of extra income leads to more spending, which creates more income, and so on. The multiplier effect refers to the increase in final income arising from any new injection of spending

derivatives market

1: is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different, as well as the way they are traded, though many market participants are active in both.

Monetary policy

1: is the process by which the monetary authority of a country, typically the central bank or currency board, controls either the cost of very short-term borrowing or the monetary base, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency 2: consists of the actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as modifying the interest rate, buying or selling government bonds, and changing the amount of money banks are required to keep in the vault (bank reserves).

Nominal Wage

1: is the rate of pay employees are compensated. If you're paid $15.00 per hour, your nominal wage is $15.00 per hour. The most important thing to know about a nominal wage is that it is not adjusted for inflation. -nominal wages are also called money wages 2: is simply the amount of money a person makes. For example, if your employer pays you wages of $3,000 a month, your nominal monthly wage is $3,000.

Aggregate demand

1: is the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels. This is the demand for the gross domestic product of a country. "also called domestic final demand (DFD) " 2: is an economic measurement of the sum of all final goods and services produced in an economy, expressed as the total amount of money exchanged for those goods and services. Since aggregate demand is measured by market values, it only represents total output at a given price level and does not necessarily represent quality or standard of living.

Future Value

1: is the value of a current asset at a specified date in the future based on an assumed rate of growth. 2: is the value of an asset at a specific date. It measures the nominal future sum of money that a given sum of money is "worth" at a specified time in the future assuming a certain interest rate, or more generally, rate of return; it is the present value multiplied by the accumulation function.

Expansionary Fiscal Policy

1: is when the government expands the money supply in the economy. It uses budgetary tools to either increase spending or cut taxes. That provides consumers and businesses with more money to spend. In the United States, Congress must write legislation to create these measures. The president can start the process, but Congress must author and pass the bills. (push the gas and drive the economy) https://www.youtube.com/watch?v=bv-uNNkE39I

Money Market

1: is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Among the most common money market instruments are eurodollar deposits, negotiable certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).

Full employment

1: means that everyone who wants a job have all the hours of work they need on "fair wages" [wiki] 2: full employment is sometimes defined as the level of employment at which there is no cyclical or deficient-demand unemployment 3: is an economic situation in which all available labor resources are being used in the most efficient way possible. Full employment embodies the highest amount of skilled and unskilled labor that can be employed within an economy at any given time. Any remaining unemployment is considered to be frictional, structural or voluntary.

consumer price index (CPI)

1: measures changes in the price level of market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. 2: which traditionally measured the cost of a fixed market basket of consumer goods and services relative to the cost of that bundle during a particular base year. Recent studies indicate that the CPI trend has a major upward bias because of index-number problems and omission of new and improved goods, and the government has undertaken steps to correct some of this bias

Labor productivity

1: measures the hourly output of a country's economy. Specifically, it charts the amount of real gross domestic product (GDP) produced by an hour of labor. Growth in labor productivity depends on three main factors: investment and saving in physical capital, new technology and human capital. 2: also called workforce productivity: is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity, often referred to as labor productivity, is a measure for an organization or company, a process, an industry, or a country. 3: is equal to the ratio between a volume measure of output (gross domestic product or gross. value added) and a measure of input use (the total number of hours worked or total employment). output per period/number of empolyee's at work.

Labour Force

1: or currently active population, comprises all persons who fulfil the requirements for inclusion among the employed (civilian employment plus the armed forces) or the unemployed. The employed are defined as those who work for pay or profit for at least one hour a week, or who have a job but are temporarily not at work due to illness, leave or industrial action. The armed forces cover personnel from the metropolitan territory drawn from the total available labour force who served in the armed forces during the period under consideration, whether stationed in the metropolitan territory or elsewhere. The unemployed are defined as people without work but actively seeking employment and currently available to start work. This indicator is seasonally adjusted and it is measured in persons. [https://data.oecd.org/emp/labour-force.htm] -also called" Work force"

velocity of money" (also "The velocity of circulation of money

1: refers to how fast money passes from one holder to the next. 2: It can refer to the -income velocity of money-, which is the frequency at which the average same unit of currency is used to purchase newly domestically-produced goods and services within a given time period. In other words, it is the number of times one unit of money is spent to buy goods and services per unit of time.Alternatively and less frequently, it can refer to the -transactions velocity of money-, which is the frequency with which the average unit of currency is used in any kind of transaction in which it changes possession—not only the purchase of newly produced goods, but also the purchase of financial assets and other items."

Fiscal Policy

1: refers to the use of government spending and tax policies to influence macroeconomic conditions, including aggregate demand, employment, inflation and economic growth. 2: is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. These two policies are used in various combinations to direct a country's economic goals. 3: is the use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy. According to Keynesian economics, when the government changes the levels of taxation and government spending, it influences aggregate demand and the level of economic activity. Fiscal policy is often used to stabilize the economy over the course of the business cycle.

discretionary fiscal policy

1: signifies the deliberate changes of taxes and spending by the government to stabilize the economy through aggregate demand by achieving full employment, control inflation, and economic growth. However, there is a difficulty with discretionary fiscal policy: Timing. There is usually a lag between the time fiscal policy changes are needed and the instance that the need to act is widely recognized. There can also be a substantial amount of time between the time of recognition and the time that fiscal policy changes are actually enacted

Frictional unemployment

1: the unemployment which exists in any economy due to people being in the process of moving from one job to another. [dictionary] 2: is always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information.

Contractionary Fiscal Policy

1: to slow down the economy, which offsets - or reverses - an inflation problem. (put the brakes on the economy). 2: is when the government either cuts spending or raises taxes. It gets its name from the way it contracts the economy. It reduces the amount of money available for businesses and consumers to spend. https://www.youtube.com/watch?v=bv-uNNkE39I

Actual GDP

1:is a country's measured output at any interval. Since the Actual GDP will rarely reach the Potential GDP, the GDP gap is considered a measure of wasted potential output due to a country's unemployment rate coupled with business and government inefficiencies. http://www.businessdictionary.com/definition/GDP-Gap.html

Bond Market

1:is a financial market in which the participants are provided with the issuance and trading of debt securities. The bond market primarily includes government-issued securities and corporate debt securities, facilitating the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations. [also called the debt market, credit market] 2: is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on. Its primary goal is to provide long-term funding for public and private expenditures.

Disinflation

1:is a temporary slowing of the pace of price inflation. It is used to describe instances when the inflation rate has reduced marginally over the short term. ***It should not be confused with deflation, which can be harmful to the economy. 2: is a decrease in the rate of inflation - a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. Disinflation occurs when the increase in the "consumer price level" slows down from the previous period when the prices were rising. - the opposite of reflation

Crowding out Effect

1:is an economic theory arguing that rising public sector spending drives down or even eliminates private sector spending. 2:A situation when increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total investment spending.

Discretionary Income

1:is the amount of an individual's income that is left for spending, investing or saving after paying taxes and paying for personal necessities, such as food, shelter and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services. Because discretionary income is the first to shrink amid a job loss or pay reduction, businesses that sell discretionary goods tend to suffer the most during economic downturns and recessions. 2: is the amount of income that a household or individual has to invest, save or spend after taxes and necessities are paid. Discretionary income is similar to disposable income because it's derived from it; however, there is one key difference. Disposable income does not take necessities into account. Necessities a household or individual may have are rent, clothing, food, bill payments, goods and services, and other typical expenses. *** Notice the DIFFERENCE between disposable income.

Basic Necessities / Needs

A traditional list of immediate "basic needs" is food (including water), shelter and clothing. Many modern lists emphasize the minimum level of consumption of 'basic needs' of not just food, water, clothing and shelter, but also sanitation, education, telecommunication (internet) and healthcare. Different agencies use different lists.

Asset

In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset.

quantity theory of money (QTM)

In monetary economics, this theory states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply.

hyperinflation

Occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of local money. The population normally switches to holding relatively stable foreign currencies. Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value. The value of economic items remains relatively stable in terms of foreign currencies.

Non-discretionary fiscal policy

Such policies produce impacts automatically, what is called automatic stabilizers technically. Without specific new legislation, increase (decrease) budget deficits during times of recessions (booms). They enact counter-cyclical policy without the lags associated with legislative policy changes. For example, progressive taxation push people into higher income tax brackets during boom times, substantially increasing their tax bill and reducing government budget deficits (or increasing government surpluses). During recessions, many individuals fall into lower tax brackets or have no income tax liability. This increases the size of the government budget deficit (or reduces the surplus). https://www.quora.com/What-is-a-non-discretionary-fiscal-policy-How-does-it-differ-from-discretionary-fiscal-policy. ***notice similarity to automatic stabilization. Its also called Automatic Fiscal Policy.

Tax Multiplier

Tax multiplier represents the multiple by which GDP increases (decreases) in response to a decrease (increase) in taxes charged by governments. There are two versions of the tax multiplier: the simple tax multiplier and the complex tax multiplier, depending on whether the change in taxes affects only the consumption component of GDP or it affects all the components of GDP.

Classical Theory of Economics (Also called classical theory of aggregate supply)

The fundamental principle of the classical theory is that the economy is self‐regulating. Classical economists maintain that the economy is always capable of achieving the natural level of real GDP or output, which is the level of real GDP that is obtained when the economy's resources are fully employed. While circumstances arise from time to time that cause the economy to fall below or to exceed the natural level of real GDP, self‐adjustment mechanisms exist within the market system that work to bring the economy back to the natural level of real GDP. The classical doctrine—that the economy is always at or near the natural level of real GDP—is based on two firmly held beliefs: Say's Law and the belief that prices, wages, and interest rates are flexible. https://www.cliffsnotes.com/study-guides/economics/classical-and-keynesian-theories-output-employment/the-classical-theory

Price Index

a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time

Automatic stabilizers

are economic policies and programs designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers on an individual basis.

Final Goods or consumer goods

are goods that are ultimately consumed rather than used in the production of another good. For example, a microwave oven or a bicycle which is sold to a consumer is a final good or consumer good, whereas the components which are sold to be used in those goods are called intermediate goods.

Substitution bias

describes a possible bias in economic index numbers if they do not incorporate data on consumer expenditures switching from relatively more expensive products to cheaper ones as prices changed. This occurs when prices for items change relative to one another. Consider how consumer expenditures are reflected in a consumer price index. Consumers will tend to buy more of the good whose price declined, and less of the now relatively more expensive good. This change in consumption may not be reflected in the longstanding market basket from which a consumer price index is constructed. If a selected good is bought by consumers and it is therefore included in the CPI basket, but when an increase in price of that selected good occurs customers may buy a cheaper substitute, while the CPI basket may not quickly capture this change. If product A is purchased by most consumers, and similar product B goes on sale making it cheaper, consumers will naturally buy what is cheaper. Substitution bias can cause inflation rates to be over-estimated.

Government spending or expenditure

includes all government consumption, investment, and transfer payments.[1][2] In national income accounting the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (government gross capital formation). These two types of government spending, on final consumption and on gross capital formation, together constitute one of the major components of gross domestic product. Government spending can be financed by government borrowing, seigniorage, or taxes. Changes in government spending is a major component of fiscal policy used to stabilize the macroeconomic business cycle.

Liability

is a company's financial debt or obligations that arise during the course of its business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services.

deflation

is a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. ***This is distinct from but similar to price deflation, which is a general decrease in the price level, though the two terms are often mistaken for each other and used interchangeably.

derivative

is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.

Inflationary gap

is a macroeconomic concept that describes the difference between the current level of real gross domestic product (GDP) and the anticipated GDP that would be experienced if an economy is at full employment, also referred to as the potential GDP. For the gap to be considered inflationary, the current real GDP must be the higher of the two metrics. -Can be contrasted with a recessionary gap-

GDP Deflator

is a measure of the level of prices of all new, domestically produced, final goods and services in an economy. Like the consumer price index (CPI), the GDP deflator is a measure of price inflation/deflation with respect to a specific base year; the GDP deflator of the base year itself is equal to 100. Unlike the CPI, the GDP deflator is not based on a fixed basket of goods and services; the "basket" for the GDP deflator is allowed to change from year to year with people's consumption and investment patterns.

GDP per Capita

is a measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in that country. The per capita GDP is especially useful when comparing one country to another, because it shows the relative performance of the countries.

expenditure method of Calculating GDP

is a method for calculating gross domestic product (GDP), which totals consumption, investment, government spending and net exports.

Recessionary gap

is a term routed in macroeconomic theory that summarizes the situation where an economy is operating at below its full-employment equilibrium. Under this condition, the level of real gross domestic product (GDP) is lower than the level at full employment, which puts downward pressure on prices in the long run. -can be contrasted with inflationary gap-

Phillips Curve

is an economic concept developed by A. W. Phillips which states that inflation and unemployment have a stable and inverse relationship. The theory states that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment. -more inflation = less unemployment

Supply Shock

is an event that suddenly increases or decreases the supply of a commodity or service, or of commodities and services in general. This sudden change affects the equilibrium price of the good or service or the economy's general price level. In the short run, an economy-wide negative supply shock will shift the aggregate supply curve leftward, decreasing the output and increasing the price level.

Real Interest Rate

is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor. The real interest rate of an investment is calculated as the amount by which the nominal interest rate is higher than the inflation rate: Real Interest Rate = Nominal Interest Rate - Inflation (Expected or Actual)

income approach to measuring gross domestic product (GDP)

is based on the accounting reality that all expenditures in an economy should equal the total income generated by the production of all economic goods and services. It also assumes that there are four major factors of production in an economy and that all revenues must go to one of these four sources. Therefore, by adding all of the sources of income together, a quick estimate can be made of the total productive value of economic activity over a period. Adjustments must then be made for taxes, depreciation, and foreign factor payments.

Dissaving

is negative saving. If spending is greater than income, dissaving is taking place. This spending is financed by already accumulated savings, such as money in a savings account, or it can be borrowed.

Real estate

is property comprised of land and the buildings on it, as well as the natural resources of the land, including uncultivated flora and fauna, farmed crops and livestock, water and mineral deposits. Although media often refers to the "real estate market," from the perspective of residential living, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of residential real estate include undeveloped land, houses, condominiums and town houses; examples of commercial real estate are office buildings, warehouses and retail store buildings; and examples of industrial real estate include factories, mines and farms.

Marginal propensity to consume (MPC)

is the amount of extra consumption generated by an extra dollar of disposable income

treasury stock

is the amount of shares a company holds in its treasury.

Federal Reserve system

is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises.

Capital Stock

is the common and preferred stock a company is authorized to issue according to the corporate charter. Accountants define capital stock as one component of the equity section in a company's balance sheet. Firms can issue more capital stock over time or buy back shares that are currently owned by shareholders. - stock is the total amount of shares a company is authorized to issue

Time value of money (TVM)

is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Present Value

is the current worth of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.

National Debt or Government Debt

is the debt owed by a government. By contrast, the annual "government deficit" refers to the difference between government receipts and spending in a single year. Government debt can be categorized as internal debt (owed to lenders within the country) and external debt (owed to foreign lenders).

Autonomous Consumption

is the minimum level of consumption or spending that must take place even if a consumer has no disposable income, such as spending for basic necessities

GDP

is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

unemployment rate

is the share of the labor force that is jobless, expressed as a percentage. It is a lagging indicator, meaning that it generally rises or falls in the wake of changing economic conditions, rather than anticipating them. When the economy is in poor shape and jobs are scarce, the unemployment rate can be expected to rise. When the economy is growing at a healthy rate and jobs are relatively plentiful, it can be expected to fall. [unemployment rate]

aggregate supply (AS)

is the total supply of goods and services that firms in a national economy plan on selling during a specific time period. It is the total amount of goods and services that firms are willing and able to sell at a given price level in an economy. - also called domestic final supply (DFS)" -also called total output -is the total supply of goods and services produced within an economy at a given overall price level in a given period. It is represented by the aggregate supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally, there is a positive relationship between aggregate supply and the price level ***Notice similarity to GDP: from khan academy: Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP. The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run. https://www.khanacademy.org/economics-finance-domain/macroeconomics/aggregate-supply-demand-topic/aggregate-supply-demand-tut/a/building-a-model-of-aggregate-demand-and-aggregate-supply-cnx

Money Supply

is the total value of monetary assets available in an economy at a specific time. Public and private sector analysts have long monitored changes in the money supply because of the belief that it affects the price level, inflation, the exchange rate and the business cycle. That relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between money-supply growth and long-term price inflation, at least for rapid increases in the amount of money in the economy.

Disposable income

known as disposable personal income (DPI), is the amount of money that households have available for spending and saving after income taxes have been accounted for. Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy. It's calculated by subtracting income taxes from income.

Unemployment

occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labor force. https://www.investopedia.com/terms/u/unemployment.asp#ixzz5EkPBRHjA

Budget Deficit

occurs when expenses exceed revenue, and it is an indicator of financial health. The government generally uses this term in reference to its spending rather than business or individuals. Accrued government deficits form the national debt.

budget surplus

often refers to the financial states of governments; individuals prefer to use the term 'savings' instead of the term 'budget surplus.' A surplus is an indication that the government is being effectively managed.

Intermediate goods

or producer goods or semi-finished products are goods, such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or make and then sell, or buy then use them.

Illiquid Asset

refers to the state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset.

Long-Run Aggregate Supply (LAS)

represents the relationship between the price level and output in the long-run. It differs from the Short-Run Aggregate Supply (SAS) in that no input prices are assumed to be constant. Thus, LAS is a representation of potential output. The LAS curve is vertical because it shows potential output and when this happens all prices, even input prices, rise when a rise in price level occurs.