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33 Cards in this Set

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microeconomics
Examines the functioning of individual industries and the behavior of individual decision-making units—business firms and households.
macroeconomics
Deals with the economy as a whole. Macroeconomics focuses on the determinants of total national income, deals with aggregates
such as aggregate consumption and investment, and looks at the overall level of prices instead of individual prices
aggregate behavior
the behavior of all households and firms together
sticky prices
prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded
microeconomic foundations of macroeconomics
themicroeconomic principles underlying macroeconomic analysis
great depresssion
The period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s.
john maynard keynes
Much of macroeconomics has roots in _____ work. According to ______, it is not prices and wages that determine the level of employment, as classical models had suggested, but instead the level of aggregate demand for goods and services.
fine-tuning
the phrase used by walter heller to refer to the governments role in regulating inflation and unemployment
stagflation
occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation).
inflation, output growth, unemployment
three of the major concerns of macroeconomics are
inflation
an increase in the overall price level
hyperinflation
a period of very rapid increases in the overall price level.
a decrease in the overall price level
deflation
business cycle
the cycle of short term ups and downs in the economy
aggregate output
the total quantity of goods and services produced in an economy in a given period.
recession
a period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters.
depression
a prolonged and deep recession
unemployment rate
the percentage of the labor foce that is unemployed
fiscal policy, monetary policy, growth or supply side policies
there are three kinds of policy that the government has used to influence the macroeconomy
fiscal policy
government policies concerning taxes and expenditures (spending)
monetary policy
the tools used by the federal reserve to control the quantity of money in the economy
supply side policies
governemnt policies that focus on stimulating aggregate supply instead of aggregate demand.
households, firms, the government, the rest of the world
macroeconomics focuses on four groups.
circular flow
a diagram showing the income received and payments made by each sector of the economy
transfer payments
Cash payments made by the government to people who do not supply goods, services, or labor
in exchange for these payments. They include Social Security benefits, veterans’ benefits, and welfare payments.
treasury bonds, notes, and bills
promissory notes issued by the federal government when it borrows money
corporate bonds
promissory notes issued by corporations when they borrow money.
shares of stock
financial instruments that give to the holder a share in the firms ownership and therefore the right to share in the firms profits
dividends
the portion of a corporations profits that the firm pays out each period to its shareholders
aggregate demand
the total demand for goods and services in an economy
aggregate supply
the total supply of goods and services in an economy
expansion or boom
the period in the business cycle from a trough up to a peak, during which output and employment rise.
contraction, recession, or slump
the period in the business cycle from a peak down to a trough, during which output and employment fall.