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.

Real interest rate
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Represents the opportunity cost of borrowing money or the return earned on savings, adjusted for the rate of inflation in the economy. Equals the nominal interest rate minus the inflation rate.

Real interest rate
Money
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Any object that can be used to facilitate the exchange of goods and services in a market.

Money
GDP growth rate
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Measures the percentage change in a nation’s GDP between one year and an earlier year. Equals Year 2’s GDP minus Year 1’s GDP, divided by year 1’s GDP times 100. For example: If in 2011 GDP = 120 billion, and in 2010 it equaled 100 billion. The GDP growth rate = (120-100)/100 = 0.2 x 100 = 20%

GDP growth rate
Rent
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The price of land resources. Rent must be paid by producers, either as an explicit cost or as an opportunity cost for those who own the land resources employed in production.

Rent
Fiscal policy
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Changes in government spending and tax collections implemented by government with the aim of either increasing or decreasing aggregate demand to achieve the macroeconomic objectives of full employment and price level stability.

Fiscal policy
Velocity of money
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A measure of the number of times an average unit of currency will be spent in a nation in a year. Assumed to be constant by the monetarist school of macroeconomic theory. A component of the quantity theory of money.

Velocity of money
Demand side policies
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Actions implemented by the government or the central bank aimed at either increasing (expansionary) or decreasing (contractionary) aggregate demand to promote the achievement of several macroeconomic objectives.

Demand side policies
Market system
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Market economic system: A system of resource allocation in which buyers and sellers meet in markets to determine the price and quantity of goods, services and productive resources.

Market system
Phillips Curve
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A downward sloping curve showing the short run tradeoff between the level of inflation and the level of unemployment in a nation. There is also a long-run curve which is vertical at the natural rate of unemployment showing that in the long run there is no trade off between the price level and the level of unemployment in an economy.

Phillips Curve
Full employment
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When an economy is producing at a level of output at which almost all the nation’s resources are employed. The unemployment rate at this level of output equals the natural rate of unemployment, and includes only frictional and structural unemployment.

Full employment

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