AP Macroecon Unit 5 Flashcards

9478813368	Inflationary Gap	An economy is producing more than their potential output at full employment	0
9478815412	Recessionary Gap	When aggregate output is below potential output	1
9478820128	Crowding Out Effect	The loss of funds for private investment due to government borrowing	2
9478821337	Budget Deficit	When a government spends more than it collects in tax revenues in a given year.	3
9478822346	Government Debt	The sum of all past budget deficits and surpluses	4
9478823910	Debt-GDP Ratio	The government's debt as a percentage of GDP	5
9478825940	Implicit Liabilities	Spending promises that government has made that are essentially a form of debt	6
9478834284	Federal Funds Rate	Interest rate banks charge each other for loans	7
9478836041	Expansionary Policy	A stabilization policy designed to increase real GDP.	8
9478836950	Contractionary Policy	A stabilization policy designed to reduce real GDP.	9
9478838783	Hyperinflation	A very high rate of inflation	10
9478838790	Stagflation	A period of falling output and rising prices	11
9478841277	Cost-Push Inflation	A sustained rise in the price level caused by a leftward shift of the aggregate supply curve	12
9478842602	Demand-Pull Inflation	A sustained rise in the price level caused by a rightward shift of the aggregate demand curve	13
9478844948	Phillips Curve	A curve showing the relationship between the inflation rate and the unemployment rate.	14
9478847589	Monetarism	Asserts that GDP will grow steadily if the money supply grows steadily	15
9478860534	Velocity of Money	Rate at which money changes hands	16
9478864441	Classical Economics	The theoretical idea and approach that markets can fix themselves and "solve" economic problems	17
9478871563	Keynesianism	Belief that an economy doesn't always operate at full employment and needs governmental action	18
9478915132	Monetary Neutrality	Changes in the money supply have no real effects on the economy in the long run	19
9538411730	Rational Expectations Model	The idea that people understand government policy affects inflation so they seek adjusted wages	20
9538432075	Adaptive Expectations Model	The idea that people only use prior experience to assume what future inflation will be	21