EOCa Review Macroeconomics
Inflation
A general and progressive increase in prices
Real GDP
GDP adjusted for inflation
Business Cycles
General swings in business activity, resulting in expanding or contracting activity during different phases of the cycle.
Fiscal Policy
Government use of taxing and spending to address economic problems and situations
Current GDP
Gross Domestic Product measured in current prices, not adjusted for inflation
Budget Deficits
The amount by which a government's spending in a given fiscal year exceeds its revenue.
National Debt
The amount of money a national government owes to other governments or its people
Federal Reserve
The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates
Gross Domestic Product
The total value of goods and services produced within the borders of a country during a specific time period, usually one year.
Nominal GDP
a measure of a country's economic output (GDP) valued in current dollars; nominal GDP does not reflect the effects of inflation
poverty guidelines
administrative guidelines used to determine eligibility for certain federal programs
Public Debt
all of the money borrowed by the government and not yet repaid, plus the accrued interest on that money; also called the national debt or federal debt
poverty threshold
annual dollar income used to determine the number of people in poverty
entitlements
broad social program that uses established eligibility requirements to provide health, nutritional, or income supplements to individuals
Monetary Policy
changes in the supply of money and availability of credit to promote stable economy and keep inflation low
recession
decline in real GDP lasting at least two quarters
deflation
decrease in the general level of prices for goods and services
supply-side policies
economic policies designed to stimulate the economy by increasing production
demand-pull inflation
explanation that prices rise because all sectors of the economy try to buy more goods and services than the economy can produce
cost-push inflation
explanation that rising input costs, especially energy and organized labor, drive up the prices of products
Medicare
federal health-care program for senior citizens, regardless of income
Keynesian economics
government spending and taxation policies suggested by John Maynard Keynes to stimulate the economy
Lorenz Curve
graph showing how the actual distribution of income differs from an equal distribution
GDP per capita
gross domestic product on a per person basis; can be expressed in current or constant dollars
aggregate supply curve
hypothetical curve showing different levels of real GDP that would be produced at various price levels
aggregate demand curve
hypothetical curve showing different levels of real GDP that would be purchased at various price levels
Medicaid
joint federal-state medical insurance program for low-income people
macroeconomic equilibrium
level of real GDP consistent with a given price level and marked by the intersection of aggregate supply and aggregate demand
output-expenditure model
macroeconomic model describing aggregate demand by the consumer, investment, government, and foreign sectors
multiplier
magnified change in overall spending caused by a change in investment spending
econometric model
mathematical expression used to describe how the economy is expected to perform in the future
civilian labor force
non-institutionalized part of the population, aged 16 and over, either working or looking for a job
Employment
noninstitutionalized part of the population, aged 16 and over, either working
Unemployment
noninstitutionalized part of the population, aged 16 and over, looking for a job
expansion
period of uninterrupted growth of real GDP
disposable personal income (DPI)
personal income less individual income taxes
trough
point in time when real GDP stops declining and begins to expand
peak
point in time when real GDP stops expanding and begins to decline
wage-price controls
policies and regulations making it illegal for firms to give raises or raise prices without government permission
accelerator
program that automatically provides benefits to offset a change in people's incomes
deregulation
relaxation or removal of government regulations on business activities
monetarism
school of thought stressing the importance of stable monetary growth to control inflation and stimulate long-term economic growth
consumer price index (CPI)
series used to measure price changes for a representative sample of frequently used consumer items
Economic Growth
steady growth in the productive capacity of the economy (and so a growth of national income)
negative income tax
tax system that would make cash payments to individuals with incomes below certain levels
Aggregate Supply
the total amount of goods and services in the economy available at all possible price levels
Aggregate Demand
the total value of all goods and services demanded at different price levels
structural unemployment
unemployment caused by a fundamental change in the economy that reduces the demand for some workers
cyclical unemployment
unemployment directly related to swings in the business cycle
frictional unemployment
unemployment involving workers changing jobs or waiting to go to new ones
base year
year serving as point of comparison for other years in a price index or other statistical measure