Econ 2200 Test 1

Front 1

microeconomics

Back 1

Examines the functioning of individual industries and the behavior of individual decision-making units—business firms and households.

Front 2

macroeconomics

Back 2

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

Front 3

aggregate behavior

Back 3

the behavior of all households and firms together

Front 4

sticky prices

Back 4

prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded

Front 5

microeconomic foundations of macroeconomics

Back 5

themicroeconomic principles underlying macroeconomic analysis

Front 6

great depresssion

Back 6

The period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s.

Front 7

john maynard keynes

Back 7

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.

Front 8

fine-tuning

Back 8

the phrase used by walter heller to refer to the governments role in regulating inflation and unemployment

Front 9

stagflation

Back 9

occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation).

Front 10

inflation, output growth, unemployment

Back 10

three of the major concerns of macroeconomics are

Front 11

inflation

Back 11

an increase in the overall price level

Front 12

hyperinflation

Back 12

a period of very rapid increases in the overall price level.

Front 13

a decrease in the overall price level

Back 13

deflation

Front 14

business cycle

Back 14

the cycle of short term ups and downs in the economy

Front 15

aggregate output

Back 15

the total quantity of goods and services produced in an economy in a given period.

Front 16

recession

Back 16

a period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters.

Front 17

depression

Back 17

a prolonged and deep recession

Front 18

unemployment rate

Back 18

the percentage of the labor foce that is unemployed

Front 19

fiscal policy, monetary policy, growth or supply side policies

Back 19

there are three kinds of policy that the government has used to influence the macroeconomy

Front 20

fiscal policy

Back 20

government policies concerning taxes and expenditures (spending)

Front 21

monetary policy

Back 21

the tools used by the federal reserve to control the quantity of money in the economy

Front 22

supply side policies

Back 22

governemnt policies that focus on stimulating aggregate supply instead of aggregate demand.

Front 23

households, firms, the government, the rest of the world

Back 23

macroeconomics focuses on four groups.

Front 24

circular flow

Back 24

a diagram showing the income received and payments made by each sector of the economy

Front 25

transfer payments

Back 25

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.

Front 26

treasury bonds, notes, and bills

Back 26

promissory notes issued by the federal government when it borrows money

Front 27

corporate bonds

Back 27

promissory notes issued by corporations when they borrow money.

Front 28

shares of stock

Back 28

financial instruments that give to the holder a share in the firms ownership and therefore the right to share in the firms profits

Front 29

dividends

Back 29

the portion of a corporations profits that the firm pays out each period to its shareholders

Front 30

aggregate demand

Back 30

the total demand for goods and services in an economy

Front 31

aggregate supply

Back 31

the total supply of goods and services in an economy

Front 32

expansion or boom

Back 32

the period in the business cycle from a trough up to a peak, during which output and employment rise.

Front 33

contraction, recession, or slump

Back 33

the period in the business cycle from a peak down to a trough, during which output and employment fall.