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.

Seasonal unemployment
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A type of frictional unemployment in which a worker is in between jobs that are only available during certain seasons. For example a ski instructor who guides rafting trips in the summer will be seasonally unemployed in the spring and fall.

Seasonal unemployment
M2
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A more broadly defined component of the money supply. Equal to M1 plus savings deposits, money market deposits, mutual funds, and small time deposits.

M2
Hyperinflation
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A rapid and accelerating increase in the average price level in a nation, usually caused by monetary expansion (increases in the money supply without corresponding increases in national output)

Hyperinflation
National income
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Another term for the GDP of a nation. Measures the total income earned by households in the resources market for their provision of labor, land, capital and entrepreneurship to the nation’s producers.

National income
Marginal propensity to consume (MPC)
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The proportion of any change in income spent on domestically produced goods and services; equal to the change in consumption divided by the change in disposable income. One divided by 1-MPC determines the size of the Keynesian spending multiplier.

Marginal propensity to consume (MPC)
Deflation
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A decrease in the average price level of a nation’s output over time. Caused by either a fall in aggregate demand or an increase in aggregate supply.

Deflation
Price level
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A macroeconomic term referring to the average price of the goods produced by the various industries present in a nation’s economy. Found on the vertical axis of an aggregate demand / aggregate supply diagram.

Price level
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
Monetarism
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The macroeconomic view that the main cause of changes in aggregate output and the price level are fluctuations in the money supply.

Monetarism
Progressive tax
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A tax on income that increases in percentage as an individual’s income increases. For example, when an individual earning $50,000 pays 15% and an individual earning $100,000 pays 25% in tax.

Progressive tax

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