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.

Required reserves
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The proportion of a bank’s total deposits it is required to keep in reserve with the central bank. Determined by the required reserve ratio.

Required reserves
Export-led Growth
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A strategy for economic growth and development focused on producing exports to sell to consumers in more developed countries. Also known as “outward-oriented” growth strategy.

Export-led Growth
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
Productivity
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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
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
Rational expectations theory
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The idea that business firms and households expect monetary and fiscal policies to have certain effects on the economy and take, in pursuit of their own self-interests, actions which make these policies ineffective.

Rational expectations theory
Quantity theory of money
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MV = PY – The quantity of money in a nation (Q) times the velocity of money (V) equals the average price level (P) times the level of output). The moneterist’s view which explains how changes in the money supply will affect the price level assuming the velocity of money and the level of output are fixed.

Quantity theory of money
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
Potential output
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How much a nation can produce if all of its resources (land, labor and capital) are operating at their full capacity and at full efficiency. Contrasts with full employment output, which a nation achieves when most of its resources are employed towards production, but there exist some degree of unemployment (the natural rate of unemployment).

Potential output
Flat rate taxes
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Indirect taxes which are of a fixed amount, rather than a percentage of the sales price. For example a $3 per pack tax on cigarettes. It would be $3 whether the sales price is $2 or $5.

Flat rate taxes

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