Macroeconomics: Principles and Policy (ninth edition)
William J. Baumol and Alan S. Blinder
Thomson - South-Western
ISBN: 0-324-17382-2
Terms : Hide Images
| 25905594 | inputs | labor, machinery, buildings and other resources used to produce outputs | 0 | |
| 25905595 | outputs | goods and services that the economy produces | 1 | |
| 25905596 | growth policy | government policy intended to make the economy grow faster in the long run | 2 | |
| 25905597 | labor productivity | amount of output a worker turns out in an hour (or week or year) of labor; if output is measured by GDP, it is GDP per hour of work | 3 | |
| 25905598 | potential GDP | real GDP that the economy would produce if its labor and other resources were fully employed | 4 | |
| 25905599 | labor force | number of people holding or seeking jobs | 5 | |
| 25905600 | production function | volume of outputs that can be produced from given inputs given the available technology | 6 | |
| 25905601 | real GDP per capita | ratio of real GDP to the populatioin | 7 | |
| 25905602 | unemployment rate | number of unemployed people, expressed as a percentage of the labor force | 8 | |
| 25905603 | frictional unemployment | unemployment that is due to normal turnover in the labor market; includes people who are temporarily between jobs because they are moving or changing occupations, or are unemployed for similar reasons | 9 | |
| 25905604 | structural unemployment | refers to workers who have lost their jobs because they have been displaced by automation, because their skills are no longer in demand or because of similar reasons | 10 | |
| 25905605 | cyclical unemployment | unemployment attributable to a decline in the economy's total production; rises during recession and falls as prosperity is restored | 11 | |
| 25905606 | full employment | situation in which everyone who is willing and able to work can find a job | 12 | |
| 25905607 | unemployment insurance | government program that replaces some of the wages lost by eligible workers who lose their jobs | 13 | |
| 25905608 | purchasing power | volume of goods and services that a given sum of money will buy | 14 | |
| 25905609 | real wage rate | wage rate adjusted for inflation | 15 | |
| 25905610 | relative price | item's price in terms of some other item rather than in terms of dollars | 16 | |
| 25905611 | real rate of interest | percentage increase in purchasing power that the borrower pays to the lender for the privilege of lending | 17 | |
| 25905612 | nominal rate of interest | percentage by which the money the borrower pays back exceeds the money that he borrowed, making no adjustment for any decline in the purchasing power of this money | 18 | |
| 25905613 | economic growth | notion that standards of living rise from one year to the next | 19 | |
| 25905614 | redistribution by inflation | in general, those who lend money are apt to be victimized by inflation, and borrowers often gain from inflation | 20 | |
| 25905615 | expected rate of inflation | often inaccurate prediction put forth by economists and added to the real rate of interest to get the nominal rate of interest | 21 | |
| 25905616 | capital gain | difference between the price at which an asset is sold and the price at which it was bought | 22 | |
| 25905617 | discouraged worker | unemployed person who gives up looking for work and is therefore no longer counted as part of the labor force | 23 | |
| 25905618 | human capital | amount of skill embodied in the workforce; most commonly measured by the amount of education and training | 24 | |
| 25905619 | convergence hypothesis | nations with low levels of productivity tend to have high productivity growth rates, so that international productivity differences shrink over time | 25 | |
| 25905620 | capital | available supply of plant, equipment and software | 26 | |
| 25905621 | investment | flow of resources into the production of new capital; labor, steel and other inputs devoted to the construction of factories, warehouses, railroads and other pieces of capital during some period of time | 27 | |
| 25905622 | capital formation | refers to the process of building up the capital stock; synonymous with investment | 28 | |
| 25905623 | property rights | laws and/or conventions that assign owners the rights to use their property as they see fit (within law) | 29 | |
| 25905624 | on-the-job training | skills that workers acquire while at work, rather than in school or in formal vocational training programs | 30 | |
| 25905625 | invention | act of discovering new products or new ways of making products | 31 | |
| 25905626 | innovation | act of putting new ideas into effect by, for example, bringing new products to market, changing product designs and improving the way in which things are done | 32 | |
| 25905627 | research and development (R&D) | activities aimed at inventing new products or processes, or improving existing ones | 33 | |
| 25905628 | cost disease of the personal services | service activities that require direct personal contact tend to rise in price relative to other good and services | 34 | |
| 25905629 | aggregate demand | total amount that all consumers, business firms and government agencies spend on final goods and services | 35 | |
| 25905630 | consumer expenditure | total amount spent by consumers on newly produced goods and services (excluding purchases of new homes); abbreviated C | 36 | |
| 25905631 | investment spending | sum of the expenditures of business firms on new plant and equipment and households on new homes. Financial "investments" are not included; abbreviated I | 37 | |
| 25905632 | government purchases | refer to the goods and services purchased by all levels of government; abbreviated G | 38 | |
| 25905633 | net exports | difference between exports (X) and imports (IM); indicates the difference between what we sell to foreigners and what we buy from them; abbreviated X - IM | 39 | |
| 25905634 | national income | sum of the incomes that all individuals in the economy earned in the forms of wages, interest, rent and profits; excludes government transfer payments and is calculated before any deductions are taken for income taxes | 40 | |
| 25905635 | disposable income | sum of the incomes of all individuals in the economy after all taxes have been deducted and all transfer payments have been added; abbreviated DI | 41 | |
| 25905636 | transfer payments | sums of money that the government gives certain individuals as outright grants rather than as payments for services rendered to employers; examples are Social Security and unemployment benefits | 42 | |
| 25905637 | scatter diagram | graph showing the relationship between two variables (such as consumer spending and disposable income) | 43 | |
| 25905638 | consumption function | show the relationship between total consumer expenditures and total disposable income in the economy, holding all other determinants of consumer spending constant | 44 | |
| 25905639 | marginal propensity to consume | ratio of changes in consumption relative to changes in disposable income that produce the change in consumption; the slope of consumption on a graph; abbreviated as MPC | 45 | |
| 25905640 | money-fixed asset | asset whose value is a fixed number of dollars | 46 | |
| 25905641 | C + I + G + (X - IM) | equation for aggregate demand | 47 | |
| 25905642 | circular flow diagram | depicts a large tube in which an imaginary fluid circulates in clockwise direction; represents interactions within a market economy | 48 | |
| 25905643 | equilibrium | refers to a situation in which neither consumers nor firms have any incentive to change their behavior (they are content to continue as things are) | 49 | |
| 25905644 | expenditure schedule | shows the relationship between national income (GDP) and total spending | 50 | |
| 25905645 | induced investment | part of investment spending that rises when GDP rises and falls when GDP falls | 51 | |
| 25905646 | Y = C + I + G + (X - IM) | condition for equilibrium | 52 | |
| 25905647 | income-expenditure diagram | plots total real expenditure (on the vertical axis) against real income (on the horizontal axis); also called the 45° line diagram | 53 | |
| 25905648 | recessionary gap | amount by which the equilibrium level of GDP falls short of potential GDP | 54 | |
| 25905649 | inflationary gap | amount by which equilibrium real GDP exceeds the full employment level of GDP | 55 | |
| 25905650 | coordination failure | occurs when party A would like to change his behavior if party B would change hers, and vice versa, and yet the two changes do not take place because the decisions of A and B are not coordinated | 56 | |
| 25905651 | multiplier | ratio of the change in equilibrium GDP (Y) divided by the original change in spending that causes the change in GDP | 57 | |
| 25905652 | induced increase in consumption | increase in consumer spending that stems from an increase in consumer incomes; represented on the graph as a movement along a fixed consumption function | 58 | |
| 25905653 | autonomous increase in consumption | increase in consumer spending without an increase in consumer incomes; represented on a graph as a shift of the entire consumption function | 59 | |
| 25905654 | aggregate demand curve | downward-sloping relationship displayed when equilibrium real GDP demanded is lower when prices are higher | 60 | |
| 25905655 | full-employment level of GDP | GDP that would be produced if the labor force were fully employed; potential GDP | 61 | |
| 25905656 | opportunity cost | value of the next best alternative that must given up because of that decision | 62 | |
| 25905657 | abstraction | ignoring many details so as to focus on the most important elements of a problem | 63 | |
| 25905658 | theory | deliberate simplification of relationships used to explain how those relationships work | 64 | |
| 25905659 | correlation | tendency of variables to go up and down together | 65 | |
| 25905660 | economic model | simplified, small0scale version of some aspect of the economy; often expressed in equations, by graphs or in words | 66 | |
| 25905661 | resource | instruments provided by nature or by people that are used to create goods and services | 67 | |
| 25905662 | opportunity cost | value of the next best alternative that decision forces the decision maker to forgo | 68 | |
| 25905663 | rational decision | decision that best serves the objectives of the decision maker, whatever those objectives may be | 69 | |
| 25905664 | output | goods and services produced by a firm or economy | 70 | |
| 25905665 | input | used by a firm or an economy; labor, raw materials, electricity and other resources it uses to produce its outputs | 71 | |
| 25905666 | production possibilities frontier | shows the different combinations of various goods that a producer can turn out given the available resources and existing technology | 72 | |
| 25905667 | principle of increasing costs | states that as the production of a good expands, the opportunity cost of producing another unit generally increases | 73 | |
| 25905668 | efficiency | describes production that, given the current technology, is at its maximum; there is no way one can produce larger amounts of any output without using larger input amounts or giving up some quantity of another output | 74 | |
| 25905669 | allocation of resources | refers to the society | 75 | |
| 25905670 | division of labor | breaking up a task into a number of smaller, more specialized tasks so that each worker can become more adept at a particular job | 76 | |
| 25905671 | comparative advantage | situation in on country produces a good less inefficiently than another country relative to other goods | 77 | |
| 25905672 | market system | form of economic organization in which resource allocation decisions are left to individual producers and consumers, acting in their own best interests without central direction | 78 | |
| 25905673 | invisible hand | phrase used by Adam Smith to describe how, by pursuing their own self-interests, people in a market system are led to promote the well-being of the community | 79 | |
| 25905674 | quantity demanded | number of units of a good that consumers are willing and can afford to buy over a specified period of time | 80 | |
| 25905675 | demand schedule | table showing how the quantity demanded of some product during a specified period of time changes as the price of that product changes, holding all other determinants of quantity demanded constant | 81 | |
| 25905676 | demand curve | graphical depiction of a demand schedule; shows how the quantity demanded of some product will change as the price of that product changes during a specified period of time, holding all other determinants of quantity demanded constant | 82 | |
| 25905677 | shift in demand curve | occurs when any relevant variable other than price changes | 83 | |
| 25905678 | quantity supplied | number of units that sellers want to sell over a specific period of time | 84 | |
| 25905679 | supply schedule | table showing how the quantity supplied of some product changes as the price of that product changes during a specified period of time, holding all other determinants of quantity supplied constant | 85 | |
| 25905680 | supply curve | graphical depiction of a supply schedule; shows how the quantity supplied of some product will change as the price that product changes during a specified period of time, holding all other determinants of quantity supplied constant | 86 | |
| 25905681 | supply-demand diagram | graphs the supply and demand curves together; determines the equilibrium price and quantity | 87 | |
| 25905682 | shortage | excess of quantity demanded over quantity supplied | 88 | |
| 25905683 | surplus | excess of quantity supplied over quantity demanded | 89 | |
| 25905684 | equilibrium | situation in which there are no inherent forces that produce change | 90 | |
| 25905685 | law of supply and demand | states that in a free market the forces of supply and demand generally push the price toward the level at which quantity supplied and quantity demanded are equal | 91 | |
| 25905686 | price ceiling | maximum that the price charged for a commodity cannot legally exceed | 92 | |
| 25905687 | price floor | legal minimum below which the price charged for a commodity is not permitted to fall | 93 | |
| 25905688 | aggregation | combining many individual markets into one overall market | 94 | |
| 25905689 | aggregate demand curve | show the quantity of domestic product that is demanded at each possible value of the price level | 95 | |
| 25905690 | aggregate supply curve | shows the quantity of domestic product that is supplied at each possible value of the price level | 96 | |
| 25905691 | inflation | refers to sustained increase in the general price level | 97 | |
| 25905692 | recession | period of time during which the total output of the economy declines | 98 | |
| 25905693 | gross domestic product (GDP) | sum of the money values of all final goods and services produced in the domestic economy and sold on organized markets during a specified period of time, usually a year | 99 | |
| 25905694 | nominal GDP | calculated by valuing all outputs at current prices | 100 | |
| 25905695 | real GDP | calculated by valuing outputs of different years at common prices; far better measure of changes in total production | 101 | |
| 25905696 | final goods and services | products or services purchased by their ultimate users | 102 | |
| 25905697 | intermediate good | good purchased for resale or for use in producing another good | 103 | |
| 25905698 | deflation | refers to a sustained decrease in the general price level | 104 | |
| 25905699 | stagflation | inflation that occurs while the economy is growing slowly or in a recession | 105 | |
| 25905700 | stabilization policy | name given to government programs designed to prevent or shorten recessions and to counteract inflation | 106 | |
| 25905701 | voluntary exchange | trade in which both parties are willing participants | 107 | |
| 25905702 | marginal analysis | evaluation of impact of changes | 108 | |
| 25905703 | marginal cost | additional cost incurred by a one-unit increase in output | 109 | |
| 25905704 | externality | effect on third parties that are not part of an economic transaction | 110 | |
| 25905705 | productivity | output per hour of work | 111 | |
| 25905706 | scarcity | situation in which the amount of an item available is less than people want | 112 | |
| 25905707 | choice | decision made from a set of alternatives | 113 | |
| 25905708 | capital good | resources used in production process | 114 | |
| 25905709 | exchange | increases production because it permits specialization | 115 | |
| 25905710 | market system | system in which people can trade with others | 116 | |
| 25905711 | movement along a supply or demand curve | change in price causing a change in quantity supplied or demanded | 117 | |
| 25905712 | macroeconomics | study of behavior of an entire economy | 118 | |
| 25905713 | microeconomics | study of individual decision-making unites | 119 | |
| 25905714 | unemployment | people willing to work but without jobs | 120 |
