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| 14008230149 | circular flow diagram |  | 0 | |
| 14008235673 | Aggregate Demand | the quantity of all goods and services at different price levels. *inverse relationship btw price levels and outputs | 1 | |
| 14008263258 | AD shifts downwards for 3 reasons | 1. Real balance effect- price levels falls 2. Interest rate effect- price level falls 3. International trade effect- price level falls, relative to foreign countries Change in Ad (shifts the entire curve)= change in C,I, G, and NX | 2 | |
| 14008307720 | Four factors in change of AD | 1. Consumption 2. Investment 3. Government actions Net Exports/imports C+I+G+X= GDP | 3 | |
| 14008342961 | short-run aggregate supply | quantity of all goods and services at different price levels - sticky-wages - sticky prices - producer misperceptions - worker-misperceptions | 4 | |
| 14008473081 | long-run aggregate supply | can be changed (shift) by technology and resources * Yn is the Natural rate of GDP, or where GDP is when all resources are fully utilized | 5 | |
| 14008515300 | Recessionary Gap | - Economy is in short run equilibrium - Recessionary gap (Yn-Ye) indicates that there is unemployment because the economy is not producing at it's Natural Rate of GDP - Resources are inefficiently utilized or under utilized | 6 | |
| 14008560635 | Inflationary Gap | - economy is in short-run equilibrium - Inflationary gap (Ye-Yn) indicates that there is overproduction because the economy is producing beyond it's Natural Rate of GDP - Resources are over utilized and will wear down | 7 | |
| 14008623677 | Classical, neo-classical, and monetarists | Say's law: supply creates its own demand * economy is self-regulating - out of equilibrium, if it is left alone, it will fix itself - price and wages are flexible and will adjust - adjustment will shift SRAS - amount of savings in an economy = amount of investment S=I - policy Implication= laissez-faire | 8 | |
| 14008690239 | Keynesian view | - wages and prices are downwardly inflexible - prices are hard to lower due to menu costs - wages are hard to lower because workers will not consent - consumption (C) depends on Disposable Income (DI) | 9 | |
| 14008746768 | Keynesian View formulas | - APC= C/DI - APS=S/DI - MPC= change in C/change DI - MPS= change in S/change in DI - Multiplier= 1/MPS | 10 | |
| 14008774899 | fiscal policy | changes in government expenditures and taxes, intending to shift (primarily) the AD curve to stabilize the economy | 11 | |
| 14008819723 | expansionary policy | increase spending and/or reduce taxes to close a recessionary gap | 12 | |
| 14008836525 | contractionary policy | decrease spending and/or increase taxes to close a recessionary gap | 13 | |
| 14008861158 | Automatic stabilizers | changes in fiscal policy that occur automatically, built in to the system, and requiring no Congressional/Presidential action, as example's unemployments insurance and a progressive tax system | 14 | |
| 14008905715 | discretionary spending | changes in fiscal policy that require Congressional/Presidential action | 15 | |
| 14008917275 | Crowding out | what occurs when increased government (public) spending results in decreased private spending. The danger of crowding out occurring is when the government has a budget deficit and must borrow money to increase its spending. This borrowing is done in the Loanable Funds market, and when the government demands more credit (Loanable funds), it shifts the D curve to the right, causing an increase in interest rates. This increased interest rate dampens consumer and business borrowing, resulting in lower AD. | 16 | |
| 14009002379 | Budget Deficit | when expenditures are greater than revenues in given year | 17 | |
| 14009018305 | Budget surplus | when revenues are greater than expenditures in a given year | 18 | |
| 14009043414 | the debt | (also called public debt or the federal or national debt) is the total amount the government owes its creditors | 19 | |
| 14009069416 | M1 | the narrow definition of the money supply: currency (paper money and coins), checkable deposits, and traveler's checks | 20 | |
| 14009092951 | M2 | All of M1 + small denomination time deposits (less than $100,000) savings deposits, money market accounts, overnight repurchase agreements, and overnight eurodollars deposits | 21 | |
| 14009151511 | federal reserve | three ways that it affects money supply: - change in required-reserve ratio - change the discount rate - open market operations--buy/sell bonds | 22 | |
| 14009185224 | Monetary policy | loose (expansionary) during RECESSION- expand the supply tight (contractionary) during INFLATION- reduce the money supply *usually quicker than fiscal policy/less direct than the fiscal policy | 23 | |
| 14009226865 | money market graph | a loose policy will raise the MS, resulting in lower interest rates (undertaken during a recession) |  | 24 |
| 14009237750 | investment goods market graph | This lowers interest rates to increase investment, as well as more consumers borrowing |  | 25 |
| 14009256288 | real GDP graph | Increase borrowing affects AD, shifting it to the right, bringing the economy into equilibrium |  | 26 |
| 14009262370 | money market | changes in interest rates cause changes in investment and interest-rate driven consumption which affects AD, SRAS, PL, adn Real GDP | 27 | |
| 14009323254 | Loanable Funds Graph |  | 28 | |
| 14009333853 | appreciation | An increase in the value of one currency relative to another | 29 | |
| 14009341669 | Depreciation | decrease in the value of one currency relative to another | 30 | |
| 14009354905 | flexible exchange rate | the market determines value | 31 | |
| 14009362221 | fixed exchange rate | the value is NOT allowed to fluctuate | 32 | |
| 14009372872 | phillips curve graph |  | 33 | |
| 14009379499 | Short-Run Phillips Curve (SRPC) | the negative short-run relationship between the unemployment rate and the inflation rate | 34 | |
| 14009381219 | Long Run Phillips Curve | shows the relationship between unemployment and inflation after expectations of inflation have had time to adjust to experience | 35 | |
| 14009387138 | Real Economic Growth | increase from one period to the next in real GDP | 36 | |
| 14009401207 | factors related to economic growth | - natural resources - labor - capital - technological advances - property rights - economic freedom | 37 | |
| 14009424050 | GDP | the total market value of all final goods and services produced annually in an economy | 38 | |
| 14009428795 | Inflation | increase ion overall prices and is measured by price undexes | 39 | |
| 14009439042 | CPI | fixed market basket of goods, the base year is 100 | 40 | |
| 14009448934 | GDP deflator | another price index, broader measure than the CPI of prices in the economy. | 41 | |
| 14009465975 | civilian non institutional population | members of the population 16 years or older not in the military and not institutionalized. | 42 | |
| 14009471824 | unemployed | people not working who have looked for work during previous 4 weeks | 43 | |
| 14009475589 | cyclical unemployment | unemployment caused by a business cycle recession | 44 | |
| 14009481942 | structural unemployment | unemployment that occurs when workers' skills do not match the jobs that are available | 45 | |
| 14009484564 | frictional unemployment | A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs. | 46 | |
| 14009492953 | natural unemployment rate | varies over time and is the amount of unemployment due to structural and frictional | 47 | |
| 14009511956 | full employment | when the economy is operating at its natural rate of unemployment, but NEVER 100% | 48 | |
| 14009528639 | comparative advantage | the ability to produce a good at a lower opportunity cost than another producer | 49 | |
| 14009533386 | tariffs | Taxes on imported goods | 50 | |
| 14009538002 | Subsidies | monetary payment by the government to a producer of a good or service | 51 | |
| 14009549954 | Quotas | legal limit on how much of a good can be imported | 52 | |
| 14015875516 | consumption expenditure | the dollar value of all goods and services sold to households | 53 | |
| 14015892165 | Disposable Personal Income (DPI) | the income of households after taxes have been paid | 54 | |
| 14015895749 | Government expenditure | the dollar value of goods and services sold to governments. | 55 | |
| 14015914871 | Gross Domestic Product (GDP) | A measurement of the total goods and services produced within a country. | 56 | |
| 14015923655 | Gross National Product (GNP) | The total value of goods and services, including income received from abroad, produced by the residents of a country within a specific time period, usually one year. | 57 | |
| 14015929345 | Intermediate Sales | sales to firms that will incorporate the item into their final product | 58 | |
| 14015934142 | investment expenditures | expenditures by businesses on plant and equipment plus residential construction and the change in business inventories | 59 | |
| 14015941212 | National Income (NI) | the income earned by households and profits earned by firms after subtracting depreciation and indirect business taxes | 60 | |
| 14015960595 | national economic accounts (NEA) | a comprehensive group of statistics that measures various aspects of the economy's performance | 61 | |
| 14015968977 | net exports | exports - imports | 62 | |
| 14015973610 | Personal Income (PI) | income received by households | 63 | |
| 14015977729 | Real GDP | GDP adjusted for price changes | 64 | |
| 14015984828 | underground economy | all the illegal production of goods and services and legal production that does not pass through markets | 65 | |
| 14015988355 | GDP per capita | GDP divided by population | 66 |
