Macroeconomics Flashcards – The Economics Classroom

Macroeconomics Flashcards

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 150 flashcards covering Macroeconomics.

Spending multiplier
Click to view the definition
Click to view the Economic term

1/(1-MPC), or 1/MPS, where MPC is the marginal propensity to consume and MPS is the marginal propensity to save. It tells you how much total spending an initial injection of spending in the economy will generate. For example, if the MPC = .8 and the government spends $100 million, then the total increase in spending in the economy = $100 x 5 = $500 million.

Spending multiplier
Productivity
Click to view the definition
Click to view the Economic term

The output per unit of input of a resource. An important determinant of the level of aggregate supply in a nation. Will increase as a result of better or more capital, education and health, all which add to the human capital of a nation.

Productivity
Product market
Click to view the definition
Click to view the Economic term

The market in a nation’s circular flow of income in which households demand goods and services, which firms provide. Households make purchases, providing revenue for firms, which they in turn use to acquire resources from households in the resource market.

Product market
Infrastructure
Click to view the definition
Click to view the Economic term

The physical assets of a nation which increase the efficiency with which the nation produces its output. Includes all the roads, electricity grids, water and sewage facilities, but also factories, airports, railways, tunnels, bridges schools and hospitals: anything that increases the productivity of labor in the nation.

Infrastructure
Public sector
Click to view the definition
Click to view the Economic term

Refers to the activities undertaken by the government or the state. “Public sector investment” generally refers to government spending on infrastructure.

Public sector
Tax
Click to view the definition
Click to view the Economic term

A payment made by an individual or a firm to the government, usually levied on income, property or the consumption of goods and services. Taxes are a leakage from the circular flow of income, but they provide government with the money they use to provide government services and public goods.

Tax
Money demand
Click to view the definition
Click to view the Economic term

The sum of the transaction demand and the asset demand for money. Inversely related to the nominal interest rate. Increases and decreases (shifts to the right or left) with the level of national output.

Money demand
Proportional tax
Click to view the definition
Click to view the Economic term

A tax that places a proportionally identical burden on every individual regardless of their income. For example an income tax that requires everyone to pay 10% regardless of their income. A rich household will pay more than a lower income household, but the percentage of income paid in tax is identical.

Proportional tax
Income
Click to view the definition
Click to view the Economic term

The money earned by households for providing their resources (land, labor and capital) to firms in the resource market. Incomes include wages, interest, rent and profit.

Income
Open market operations
Click to view the definition
Click to view the Economic term

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

SHOW ME 10 NEW FLASHCARDS!!

Study Flashcards for a specific unit:

1 thought on “Macroeconomics Flashcards

Leave a Comment