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15 Cards in this Set

  • Front
  • Back
Macroeconomic equilibrium
exists when aggregate demand equals aggregate supply (no excess aggregate demand or excess aggregate supply) and there are no forces tending to change the situation other than accidental ones or ones coming from external sources
Full employment
situation in which almost everyone seeking work readily finds it.
Equilibrium level of employment
amount of employment that corresponds to a particular macroeconomic equilibrium (when there is no ecxesss supply or demand in product markets)
Aggregate supply
total supply of goods and services produced during some period

AS = (net output per hour)x(total hours of employment) = yN
Aggregate demand
the total demand for goods and services during some period.
Net exports
total exports of goods and services minus total imports of goods and services.
income minus consumption
consuming more than income allows
Deficit spending
occurs when the goverment finances its purchases by borrowing from the public.
Government Fiscal Policy
uses taxes and spending to regulate the level of total output and emloyment.
Employment effect
change in the number of hours of labor employed that results from the direct and indirect effects of a change in business investment of government deficit spending.
Employment multiplier
hours of new employment directly and indirectly created by an additional dollar of investment or other spending.
Business cycle
periodic expansion and contracton of output and employment usually taking place over a period of 3 to 10 years.
Business cycle expansion
characterized by rapid increases in employment and income.
Business cycle contractions (or recessions)
periods of increased unemployment and reduction in output and income