Macro AP Flashcards

13800091915	GDP	the dollar value of all final goods and services produced within a country's borders in a given year	0
13800097077	GDP per capita	GDP divided by population	1
13800100875	intermediate goods	goods used in the production of final goods	2
13800113468	Not included in GDP	- intermediate goods and services - inputs - used goods - financial assets like stocks and bonds - foreign-produced goods and services	3
13800125384	GDP calculation expenditure approach	Y= C+I+G+(X-IM) GDP= Private consumption+ Investment+ Government+(Exports-Imports)	4
13800135529	Nominal GDP	GDP not adjusted for inflation	5
13800140958	real GDP	GDP adjusted for inflation	6
13800151031	unemployment	people actively looking for a job	7
13800157478	unemployment rate	the percentage of the labor force that is unemployed	8
13800163747	frictional unemployment	unemployment that occurs when people take time to find a job/between jobs	9
13800167475	structural unemployment	unemployment that occurs when a workers skills are obsolete	10
13800183888	cyclical unemployment	unemployment that rises during economic downturns and falls when the economy improves	11
13800190397	natural rate of unemployment	frictional unemployment + structural unemployment	12
13800197034	full employment output	the real GDP created when there is no cyclical unemployment	13
13800197035	inflation	prices rise over time	14
13800201010	Disinflation	prices increase at slower rates	15
13800212233	people hurt by inflation	lenders with fixed interest rates, people with fixed incomes, savers	16
13800219925	people helped by inflation	-borrowers -a business where the price of the product increases faster than the price of resources	17
13800224141	nominal wage	not adjusted for inflation	18
13800228999	real wage	adjusted for inflation	19
13800288413	inflation rate	percent change in prices year to year	20
13800327626	price indices	index numbers assigned to each year that show how prices have changed relative to a specific base year	21
13800407798	consumer price index	price of market basket divided by price in base year, times 100	22
13800472189	3 causes of inflation	1. The Government Prints TOO MUCH Money (The Quantity Theory) 2. DEMAND-PULL INFLATION 3. COST-PUSH INFLATION	23
13800493597	velocity of money	the average number of times each dollar in the money supply is used to purchase goods and services included in GDP	24
13800511116	quantity theory of money	MV=PY	25
13800606583	aggregate demand	all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels	26
13800868199	Shifters of Aggregate Demand	anything that affects C,I,G,Xnet	27
13800888615	aggregate supply	the amount of goods and services that firms will produce in an economy at different price levels	28
13800894232	short-run aggregate supply curve	wages and resource prices will not increase as price level increases	29
13800904536	long-run aggregate supply curve	wages and resource prices will increase as price level increases	30
13800920697	Shifters of Aggregate Supply	1. Resource Prices or inflationary expectations 2. Actions of the Government (ex: taxes, regulations) 3. Productivity	31
13800937305	AD/AS at full employment		32
13800943164	AD/AS with inflationary gap		33
13800947193	AD/AS with recessionary gap		34
13800954442	phillips curve	a curve that shows the short-run trade-off between inflation and unemployment	35
13800963477	when aggregate supply shifts...	short run phillips curve shifts opposite way	36
13800969118	when aggregate demand shifts...	movement along the short run phillips curve occurs	37
13800989524	fiscal policy	actions by congress to stabilize the economy	38
13801012312	discretionary fiscal policy	congress passes a new bill or law	39
13801018945	non-discretionary fiscal policy	Permanent spending or taxation laws enacted to work counter cyclically to stabilize the economy	40
13801027744	contractionary fiscal policy	decrease government spending or increase taxes	41
13801048970	expansionary fiscal policy	increase government spending or decrease taxes	42
13801055650	autonomous consumption	income used for necessities	43
13801064548	disposable income	income (after taxes) that is available to you for saving or spending	44
13801069040	dissaving	income is less than autonomous spending	45
13801082201	the multiplier affect	shows how spending is magnified in an economy	46
13801093072	Marginal Propensity to Consume (MPC)	change in consumption divided by change in income	47
13801100942	Marginal Propensity to Save (MPS)	change in savings divided by change in income	48
13801117200	MPC + MPS =	1	49
13801120809	spending multiplier	1/MPS	50
13801124576	Tax Multiplier	MPC/MPS	51
13801130390	crowding out effect	when government deficit spends, the demand for loanable funds increases, causing interest rates to rise and crowding out other investors, thus decreasing investment.	52
13801155768	barter system	a system of exchange in which goods or services are traded directly for other goods or services without the use of money.	53
13801155769	commodity money	something that performs the function of money and has intrinsic value	54
13801172681	fiat money	used as money but has no other value	55
13801177024	3 functions of money	medium of exchange, unit of account, store of value	56
13801181474	financial sector	Network of institutions that link borrowers and lenders including banks, mutual funds, pension funds, and other financial intermediaries	57
13801181475	assets	anything tangible or intangible that is owned	58
13801189673	liability	anything that is owed	59
13801194671	loan	agreement between a lender and borrower, with an interest rate	60
13824791459	real interest rate	nominal interest rate - inflation rate	61
13824794424	liquidity	the ease with which an asset can be converted into the economy's medium of exchange	62
13824806805	m1 money	Cash in Circulation, Money in demand deposits (debit card), Travelers Checks	63
13824808531	m2 money	M1 plus savings accounts, money market accounts, and other near monies	64
13824810645	bonds	loans to firms in the form of an IOU that pays interest	65
13824814336	stocks	shares of ownership in a company	66
13824816706	when interest rates increase, bond prices:	decrease	67
13824821252	when interest rates decrease, bond prices:	increase	68
13824827864	the money market	demand and supply of money	69
13824830227	transaction demand for money	money held for the purpose of making everyday market purchases	70
13824834520	asset demand for money	people hold money since it is less risky than other assets	71
13824840301	money market graph		72
13824849809	demand shifters in money market	changes in PL, changes in income	73
13824873016	supply of money market	set by the fed	74
13824939344	fed actions	reserve requirement, lowering and raising discount rates, buying and selling bonds (open market operations)	75
13824935300	expansionary monetary policy	Federal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP; an easy money policy.	76
13989600700	contractionary monetary policy	Federal Reserve system actions to decrease the money supply, increase interest rates, and lower GDP	77
13989673387	loanable funds market	the private sector supply and demand of loans	78
13989678465	loanable funds demand shifters	1. Changes in perceived business opportunities 2. Changes in gov't borrowing 3. Gov't deficit/surplus	79
13989682133	loanable funds supply shifters	1. Changes in private savings behavior 2. Changes in public savings 3. Changes in foreign investment 4. Changes in expected profitability	80
13989689385	net exports	exports - imports	81
13989689386	trade surplus	exports > imports	82
13989695502	trade deficit	imports > exports	83
13989699875	balance of payments	summary of a country's international trade	84
13989702559	current account	goods and services, investment income, net transfers	85
13989705013	financial account	financial assets that are recurring	86
13989709169	foreign direct investment	when a foreign company buys a business in another country	87
13989714537	net capital outflow	foreign assets - domestic assets	88
13989718985	financial account surplus	inflow > outflow	89
13989724023	financial account deficit	outflow > inflow	90
13989761268	if the current account has a deficit:	the financial account must have a surplus	91
13989844354	if interest rate increases	inflow increases, outflow decreases	92
13989847067	if interest rate decreases	inflow decreases, outflow increases	93
13989858145	depreciation	loss of value of a country's currency with respect to a foreign currency, net exports increase	94
13989862830	appreciation	increase of value of a country's currency with respect to a foreign currency, net exports decrease	95
13989870027	foreign exchange shifters	changes in tastes, relative income, relative price level, and relative interest rates	96
13989898015	changes in relative income	Increase: more imports, demand for other country's money increases Decrease: less imports, demand for other country's money decreases	97
13989925988	floating exchange rate	the market determines the value of the country's currency	98
13989931143	fixed exchange rate	The government activity manages the country's currency	99