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Flashcards in Macro Definitions Deck (30)
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1

Aggregate Demand

The total value of goods and services demanded by different groups at a given price level in a nation

2

National Income

A measure of the total economic activity that takes place within a nation

3

Consumption

The total expenditure by households when they purchase goods and services

4

Circular flow of income

The exchanges that take place when goods and services or factors or production are sold

5

GDP

The total value of all goods and services produced in an economy in a given period of time

6

Recession

Negative economic growth occurring over two or more quarters

7

The Money market

A model showing the total supply and demand for money in a nation

8

Monetary policy

The manipulation of interest rates and money supply to influence the level of AD in a country

9

Infrastructure

The capital stock of a country that facilitates economic growth - usually provided by government

10

Equity

Refers to fairness- where all individuals in society have a fair chance at achieving economic success

11

Equality

Minimizing the disparities in income and wealth among a nation's households

12

(Economic) Efficiency

A level of performance that uses the least amount of resources to achieve highest amount of output

13

Absolute poverty

People earning below internationally defined levels of income i.e. $1.90

14

Relative poverty

Refers to low levels of income that is country-specific - relative the average level of income in that country

15

Keynesian Multiplier Effect

Any change in government spending will have a larger ultimate effect on the nation's GDP as the resulting change in household income leads to further changes in consumption and investment in the economy.

16

Economic Growth

An increase in real output over time, measured by changes in real GDP

17

Unemployment

The condition of someone of working age who is willing and able to work, actively seeking employment, but unable to find a job

18

Inflation

A sustained increase in the average price level of goods and services in a nation

19

Demand-pull inflation

Inflation caused by an increase in AD in an economy

20

Cost-push inflation

Inflation caused by an increase in the costs of production in an economy

21

Demand-deficient deflation

Result of fall in demand - Bad

22

Supply-side deflation

Result of increase in productivity and lower costs- Good

23

Productivity

Amount of output per unit of input

24

Business confidence

Related to the expectations of businesses about the future of economic conditions and affects the level of investment

25

Inflationary gap

Situation where the economy is at a level of output greater than the full employment level of output/above potential output

26

Investment

Expenditure/spending by firms on capital

27

Privatization

The government sells state-owned enterprises to the private sector

28

Budget deficit

When government spending exceeds government revenue

29

Deflationary gap

Situation where the economy is at a level of output lower than the full employment level output/ below potential output

30

Rate of inflation

The rate at which prices increase over time, causing the value of money to fall