Flashcards – all units

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 330 flashcards in total covering Micro, Macro, International and Development Economics

Demand-pull inflation
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An increase in the average price level resulting from an increase in AD without a corresponding increase in AS.

Demand-pull inflation
Unemployment
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The state of an individual who is of working age, actively seeking work, but unable to find a job.

Unemployment
Cost-push inflation
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An increase in the average price level resulting from a decrease in aggregate supply (from higher wage rates and raw material prices) and accompanied by a decrease in real output and employment.

Cost-push inflation
Open market operations
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The central bank’s buying and selling of government bonds on the open market from commercial banks and the public. Aimed at increasing or decreasing the level of reserves in the banking system and thereby affecting the interest rate and the level of aggregate demand. Selling bonds takes money out of circulation, reducing the supply of money and raising the interest rate (contractionary monetary policy). The Fed’s buying of bonds increases the amount of money in circulation, increasing the money supply and reducing interest rates (expansionary monetary policy).

Open market operations
Aggregate Demand
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A schedule or curve which shows the total demand for the goods and services of a nation at a range of price levels and at a given period of time.

Aggregate Demand
Marginal analysis
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Decision making which involves a comparison of marginal (extra) benefits and marginal costs.

Marginal analysis
Subsidy
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Payments made from the government to individuals or firms for the production or consumption of particular goods or services. Subsidies reduce the cost of production or increase the benefit of consumption, and therefore lead to a greater equilibrium quantity in the market for the subsidized good.

Subsidy
Shut-down price
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If the price of a good falls below a firm’s minimum average variable cost, there is no way the firm can hope to cover its labor costs in the short-run, thus the firm must shut down.

Shut-down price
Free Trade Agreement
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An agreement between two or more nations to reduce or eliminate barriers to trade across member states. Meant to achieve a more efficient allocation of resources between nations and a larger market for member nation’s exports, as well as a larger variety of goods for domestic consumers to enjoy.

Free Trade Agreement
GDP (per capita)
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The total value of a nation’s output divided by the number of people in the country. Gives a more accurate measure of the level of income of a nation than the GDP alone.

GDP (per capita)

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