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| 14011594693 | GDP formula | C + I + G + NX | 0 | |
| 14011596961 | GDP formula income approach | W + I + R + P | 1 | |
| 14011598646 | calculating nominal GDP | the quantity of various goods produced in a nation times their current prices, added together | 2 | |
| 14011603252 | GDP deflator | a price index used to adjust nominal GDP to arrive at real GDP. called the "deflator" because nominal GDP will usually overstate the value of a nation's output. CPI is another commonly used price index. | 3 | |
| 14011609524 | Real GDP formula | (nominal GDP/GDP deflator) x 100 | 4 | |
| 14011612036 | GDP grown rate | ((current year GDP - last year GDP)/last year GDP) x 100 | 5 | |
| 14011616402 | inflation rate via CPI | ((this years CPI - last years CPI)/last years CPI) x 100 | 6 | |
| 14011618633 | real interest rate | nominal interest rate - inflation rate | 7 | |
| 14011620159 | unemployment rate | (number of unemployed/number in labor force) x 100 | 8 | |
| 14011623305 | money multiplier | 1/RRR (required reserve ratio) application ex: an initial injection of 1,000 of new money into a banking system with reserve ratio of .1 will generate up to 1,000 x 10 = 10,000 in total money | 9 | |
| 14011633269 | quantity theory of money | MV = PQ = Y. A monetarist's view that explain how changes in the money supply (M) will affect the price level (P) and/or real output assuming the velocity of money (V) is fixed in the short run | 10 | |
| 14011640528 | MPC + MPS = | MPC + MPS = 1 | 11 | |
| 14011641923 | spending multiplier | 1/MPS or 1/1-MPC. this tells you how much total spending an initial injection of spending in the economy will generate. ex: if the MPC = .8 and the government spends 100 million, then the total increase in spending in the economy = 100 x 5 = 500 million | 12 | |
| 14011651075 | tax multiplier | -MPC/MPS or -MPC/(1-MPC). this tells you how much total spending will result from an initial change in the level of taxation. it is negative because when taxes decrease, spending increases, and vice versa. the tax multiplier will always be smaller than the spending multiplier. | 13 | |
| 14011660331 | absolute advantage | a country or individual has an absolute advantage in the production of a good | 14 | |
| 14011662101 | aggregate demand | a schedule or curve that shows the total quantity demand for all goods and services of a nation at various price levels | 15 | |
| 14011664328 | aggregate supply | the total amount of goods and services that all the firms in all the industries in a country will produce at various price levels in a given period of time | 16 | |
| 14011668619 | appreciation | an increase in the value of one currency relative to another, resulting from an increase in demand for or a decrease in the supply of the currency on the foreign exchange market | 17 | |
| 14011673421 | balance of payments | measures all the monetary exchanges between one nation and all other nations. includes the current account and the capital account | 18 | |
| 14011677365 | bonds | a certificate of debt issued by a company or a government to an investor | 19 | |
| 14011678833 | budget deficit | when a government spends more than it collects in tax revenues in a given year | 20 | |
| 14011681153 | business cycle | a model showing the short-run periods of contraction and expansion in output experienced by an economy over a period of time |  | 21 |
| 14011684099 | captial | human made resources used to produce goods and services | 22 | |
| 14011688826 | capital account/financial account | measures the flow of funds for investment in real assets or financial assets between a nation and the rest of the world | 23 | |
| 14011692559 | circular flow diagram | a model of the macro-economy that shows the connectedness of businesses, households, government, banks, and the foreign sectors. money flows in a circular direction, and goods, services, and resources flow in the opposite direction |  | 24 |
| 14011700514 | classical economic theory | the view that an economy will self correct from periods of economic shock if left alone (laissez-faire) | 25 | |
| 14011702855 | comparative advantage | when an individual, a firm, or a nation is able to produce a particular product at a lower opportunity cost than another individual, firm, or nation. | 26 | |
| 14011705575 | consumer price index | an index that measures the price of a fixed market basket of consumer goods bought by a typical consumer. CPI is used to calculate the inflation rate in a nation. | 27 | |
| 14011712299 | consumption | a component of a nations aggregate demand; measures the total spending by domestic households on goods and services | 28 | |
| 14011715663 | contractionary fiscal policy | a demand-side policy whereby government increases taxes or decreases its spending in order to reduce aggregate demand. could be used in periods of high inflation to bring down inflation rate | 29 | |
| 14011719618 | contractionary monetary policy | a demand-side policy whereby the central bank reduces the supply of money, increasing interest rates, and reducing aggregate demand. could be used to bring down high inflation rates | 30 | |
| 14011725618 | cost-push inflation | inflation resulting from a decrease in AS (from higher wage rates and raw material prices) and accompanied by a decrease in real output and employment. also referred to as stagflation or adverse aggregate supply shock |  | 31 |
| 14011732613 | crowding out effect | the rise in interest rates and the resulting decrease in investment spending in he economy caused by increased government borrowing in the loanable funds market. seen as a disadvantageous side effect of expansionary fiscal policy | 32 | |
| 14011740583 | current account | measures the balance of trade in goods and services and the flow of income between one nation and all other nations. it also records monetary gifts or grants that flow into or out of a country. equal to countrys net exports (exports - imports) | 33 | |
| 14011745700 | cyclical unemployment | unemployment caused by recession | 34 | |
| 14011746471 | deflation | a decrease in the average price level | 35 | |
| 14011748078 | demand pull inflation | inflation resulting from an increase in AD without a corresponding increase in AS |  | 36 |
| 14011750201 | demand deposit | a deposit in a commercial bank against which checks may be written, also known as check able deposit | 37 | |
| 14011755154 | devaluation | when a government intervenes in the market for its own currency to weaken it relative to another currency. usually achieved through direct intervention in the foreign exchange market or through the use of monetary policy that affects interest rates and thereby affects international demand for the currency | 38 | |
| 14011763544 | discount rate | one of the three tools of monetary policy, it is the interest rate that the federal government charges on the loans it makes to banks | 39 | |
| 14011768075 | factors of production | land, labor, capital, and entrepreneurial ability | 40 | |
| 14011773514 | excess reserves | the amount by which a banks actual reserves exceed its required reserves, lendable | 41 | |
| 14011775342 | exchange rate | the price of one currency in terms of another currency determined in foreign exchange market | 42 | |
| 14011777650 | federal funds rate | the interest rate banks charge one another for loans | 43 | |
| 14011780509 | fiscal policy | changes in the government spending and taxes implemented by the government with the aim of either increasing or decreasing AD | 44 | |
| 14011784430 | floating exchange rate | when a currencys exchange rate is determined by the free interaction of supply and demand in international foreign exchange market | 45 | |
| 14011788865 | foreign exchange market | the market in which international buyers and sellers exchange currencies for goods. it is where a currencys exchange rate relative to other currencies is determined | 46 | |
| 14011794386 | fractional reserve banking | a banking system in which banks hold only a a fraction of deposits as required reserves and can lend some of the money deposited by customers to other borrowers | 47 | |
| 14011797843 | frictional unemployment | unemployment of workers who have employable skills, such as those who are voluntarily moving between jobs or recent graduates who are looking for their first job | 48 | |
| 14011801550 | full employment | When an economy is producing at a level of output at which almost all the nation's resources are employed. The unemployment rate when an economy is at full employment equals the natural rate, and includes only frictional and structural unemployment. Full-employment output is also referred to as "potential output". | 49 | |
| 14011803575 | Gross Domestic Product (GDP) | the total market value of all final goods and services produced during a given period of time. | 50 | |
| 14011805767 | GDP deflator | the price index for all final goods and services used to adjust the nominal GDP into real GDP | 51 | |
| 14011808654 | inflation | a rise in the average level of prices in the economy over time (percentage change in CPI) | 52 | |
| 14011812712 | inflationary gap | The difference between a nation's equilibrium level of output and its full employment level of output when the nation is overheating (producing beyond its full employment level). | 53 | |
| 14011814482 | interest rate | The opportunity cost of money. Either the cost of borrowing money or the cost of spending money (e.g., the interest rate is what would be given up by not saving money). Conversely, this is the price a lender is paid for allowing someone else to use money for time. | 54 | |
| 14011815702 | law of increasing opportunity cost | As more of a particular product is produced, the opportunity cost, in terms of what must be given up of other goods to produce each unit of the product, increases. Explains the convex shape of a nation's production possibilities curve. | 55 | |
| 14011816716 | loanable funds market | The market in which the demand for private investment and the supply of household savings intersect to determine the equilibrium real interest rate. | 56 | |
| 14011818132 | long run | the period of time over which the wage rate and price level of inputs in a nation are flexible. in the long run, any changes in AD are cancelled out due to the flexibility of wages and prices and an economy will return to its full employment level of output | 57 | |
| 14011824883 | long run aggregate supply | the level of output to which an economy will always return in the long run |  | 58 |
| 14011827093 | M1 | a component of the money supply including currency and check able deposits | 59 | |
| 14011829951 | M2 | A more broadly defined component of money supply, equal to M1 plus savings deposits, money-market deposits, mutual funds, and small-time deposits. | 60 | |
| 14011832173 | M3 | The broadest component of the money supply. Equal to M2 plus large time deposits. | 61 | |
| 14011834015 | fixed exchange rate system | When a government or central bank takes action to manage or fix the value of its currency relative to another currency on the forex market | 62 | |
| 14011835316 | marginal anylasis | decision making which involves a comparison of marginal benefits and costs | 63 | |
| 14011838552 | Marginal Propensity to Consume (MPC) | the fraction of nay change in income spent on goods and services (change in consumption/change in disposable income) x 100 | 64 | |
| 14011842952 | Marginal Propensity to Save (MPS) | the fraction of any change in income that is saved (change in saving/change in disposable income) x 100 | 65 | |
| 14011846080 | market economic system | A system of resource allocation in which buyers and sellers meet in markets to determine the price and quantity of goods, services, and productive resources. | 66 | |
| 14011850145 | monetarism | The macroeconomic view that the main cause of changes in aggregate output and the price level are fluctuations in the money supply. | 67 | |
| 14011851829 | monetary policy | The central bank's manipulation of the supply of money aimed at raising or lowering interest rates to stimulate or contract the level of aggregate demand to promote the macroeconomic objectives of price-level stability and full employment | 68 | |
| 14011855406 | money | any object that can be used to facilitate the exchange of goods and services in a market | 69 | |
| 14011857134 | money demand | the sum of the transaction demand and the asset demand for money. inversely related to the nominal interest rate | 70 | |
| 14011862032 | money supply | The vertical curve representing the total supply of excess reserves in a nation's banking system. Determined by the monetary policy actions of the central bank. | 71 | |
| 14011866601 | money market | The market where the supply of money is set by the central bank; includes the downward sloping money-demand curve and a vertical money-supply curve. The "price" of money is the nominal interest rate. | 72 | |
| 14011868352 | natural rate of unemployment | The level of unemployment that prevails in an economy that is producing at its full employment level of output. Includes structural and frictional unemployment. | 73 | |
| 14011871376 | official reserves | to balance the two accounts in the balance of payments (current and financial accounts), a countrys official foreign exchange reserves measures the net effect of all the money flows from the other accounts | 74 | |
| 14011876209 | open market operations | The central bank's buying and selling of government bonds on the open market from commercial banks and the public. This is aimed at increasing or decreasing the level of reserves in the banking system and thereby affects the interest rate and the level of aggregate demand. | 75 | |
| 14011878442 | Phillips Curve (long run) | A curve vertical at the natural rate of unemployment showing that in the long run there is no trade-off between the price level and the level of unemployment in an economy. | 76 | |
| 14011879215 | phillips curve (short run) | A downward-sloping curve showing the short-run inverse relationship between the level of inflation and the level of unemployment. | 77 | |
| 14011881853 | production possibilities curve | A graph that shows the various combinations of output that the economy can possibly produce given the available factors of production and the available production technology. | 78 | |
| 14011884568 | rational expectations theory | The hypothesis that business firms and households expect monetary and fiscal policies to have certain effects on the economy and take, in pursuit of their own self interests, actions which make these policies ineffective at changing real output. | 79 | |
| 14011887047 | recessionary gap | the difference between an economys equilibrium level of output and its full employment level of output when an economy is in recession |  | 80 |
| 14011890589 | required reserves | The proportion of a bank's total deposits it is required to keep in reserve with the central bank. Determined by the required reserve ratio. | 81 | |
| 14011893222 | stagflation | A macroeconomic situation in which both inflation and unemployment increase. Caused by a negative supply shock. | 82 | |
| 14011896530 | sticky wage and price model | The short run Aggregate-Supply Curve is sometimes referred to as the "sticky wage and price model", because worker's wage demands take time to adjust to changes in the overall price level, and therefore, in the short run an economy may produce well below or beyond its full employment level of output. | 83 | |
| 14011897898 | structural unemployment | Unemployment caused by changes in the structure of demand for goods and in technology; workers who are unemployed because they do not match what is in demand by producers in the economy or whose skills have been left behind by economic advancement | 84 | |
| 14011898566 | supply shock | Anything that leads to a sudden, unexpected change in aggregate supply. Can be negative (decreases AS) or positive (increases AS). May include a change in energy prices, wages, or business taxes, or may result from a natural disaster or a new discovery of important resources. | 85 | |
| 14011900980 | trade deficit | When a country's total spending on imported goods and services exceeds its total revenues from the sale of exports to the rest of the world. Synonymous with a surplus in the current account of the balance of the payments and with a negative net export component of the GDP. | 86 | |
| 14011901739 | trade surplus | When a country's sale of exports exceeds its spending on imports. Synonymous with a surplus in the current account of the balance of payments. | 87 | |
| 14011902451 | wealth | An important determinant of consumption. Wealth is the total value of a household's assets minus all its liabilities. | 88 | |
| 14011911467 | PPF graph |  | 89 | |
| 14011913892 | productivity | output generated per unit of input | 90 | |
| 14011916401 | three basic economic questions | what should be produced, how it should be produced, and for whom it should be produced. | 91 | |
| 14011918003 | command economics v. market economics | controlled by gov. v. open | 92 | |
| 14011930595 | supply and demand graph |  | 93 | |
| 14011932238 | shifts of demand | taste/preferences, other goods prices, consumer expectations, consumer incomes, number of consumers | 94 | |
| 14011939066 | shifts of supply | subsidies/taxes, technology, related goods prices, resource costs, producer expectations, number of firms in the market | 95 | |
| 14011950192 | GDP consists of | consumer consumption, investment (business spending), government spending, and net exports | 96 | |
| 14011953005 | GDI consists of | wages, interest payments, rental payments, profits | 97 | |
| 14011960109 | GDP deflator formula | (price of selected goods in current year/price of selected goods in base year) x 100 | 98 | |
| 14011966905 | per capita GDP | real GDP/population | 99 | |
| 14011968455 | GDP growth rate | (Real GDP2 - Real GDP1) / Real GDP1 x 100 | 100 | |
| 14011976624 | calculating inflation rate from CPI | (CPI2-CPI1)/CPI1 x 100 | 101 | |
| 14011986257 | explanations for AD slope down | wealth effect, interest rate effect, net export effect | 102 | |
| 14011987239 | wealth effect | higher price levels reduce the purchasing power of money. the public feels poorer at higher price levels and thus demands a lower quantity of the nations output when price levels are high | 103 | |
| 14011991356 | interest rate effect | in response to a rise in the price level, banks will raise their interest rates on loans. at higher interest rates the quantity demanded of products and capital decreases as borrowers find higher interest rates less attractive | 104 | |
| 14011999006 | net export effect | as the price level in a country rises, goods and services produced in that country become less attractive to foreign consumers and imports become more attractive to domestic consumers, therefore at higher average price levels less of the nations output ins demanded | 105 | |
| 14012005923 | shifts in AD curve | 106 | ||
| 14012015746 | APC | consumption/income | 107 | |
| 14012015747 | APS | saving/income | 108 | |
| 14012016419 | APC + APS = | 1 or 100% | 109 | |
| 14012023957 | crowding out graph |  | 110 | |
| 14012031949 | shifts in AS | 111 | ||
| 14012034628 | Aggregate demand and supply graph |  | 112 | |
| 14012039101 | money acts as | store of value, unit of account, medium of exchange | 113 | |
| 14012041920 | money market graph |  | 114 | |
| 14012045315 | shifts in demand money | 115 | ||
| 14012045316 | loanable funds market graph |  | 116 | |
| 14012046851 | shifts in demand loanable funds | 117 | ||
| 14012046852 | shifts in supply loanable funds | 118 | ||
| 14012050367 | 3 Tools of the Fed | changing required reserve ratio, changing the discount rate, engaging in open market operations | 119 | |
| 14012055614 | phillips curve graph | above equilibrium (left movement) is caused by increase in AD, movement right is caused by decrease in AD, shift in PC is caused by SRAS (left in AS goes right in PC) |  | 120 |
| 14012076106 | balance of payments | all accounts = 0 when balanced. if a country's current account is a surplus (above 0) then its capital account and official reserves added together will be in deficit (below 0) and vice versa | 121 | |
| 14012087444 | Foreign Exchange Market |  | 122 | |
| 14012091765 | shifts for supply of currency | tastes, income, inflation rates, interest rates, speculation | 123 |
