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.

Net exports
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A component of aggregate demand. Equals the income earned from the sale of exports to the rest of the world minus expenditures by domestic consumers on imports.

Net exports
Land
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Includes all natural resources needed to undertake production of goods or services: including soil, timber, minerals, fossil fuels, fresh water, livestock, fish, etc… “the gifts of nature”

Land
Marginal
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Means “additional”. An important term in economics, which often focuses on “marginal analysis” meaning we compare the additional cost of an action to the additional benefit it creates.

Marginal
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
Private sector
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Refers to the activities undertaken by the private households and firms in an economy. “Private sector spending” includes household consumption and investment by private, non-government-owned firms.

Private sector
Spending multiplier
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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
Inflationary gap
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The difference between a nation’s equilibrium level of output and its full employment level of output when the nation is over-heating (producing beyond its full employment level).

Inflationary gap
Human capital
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The value of labor created through education, training, knowledge and health. An important determinant of aggregate supply and the level of economic growth in a nation.

Human capital
Gross Domestic Product (GDP)
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The total market value of all final goods and services produced during a given time period within a country’s borders. Equal to the total income of the nation’s households or the total expenditures on the nation’s output.

Gross Domestic Product (GDP)
Recessionary gap
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The difference between an economy’s equilibrium level of output and its full employment level of output when an economy is in recession.

Recessionary gap

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