Macro Test 1

Front 1

Gross Domestic Product (GDP)

Back 1

a measure of all currently produce final goods and services

Front 2

Unemployment Rate

Back 2

the number of unemployed persons as a percentage of the labor force

Front 3

Inflation

Back 3

a rise in the general level of prices

Front 4

Price Index

Back 4

a measure of the aggregate price level relative to a chosen base year

Front 5

Consumer Price Index (CPI)

Back 5

a measure of the retail prices of a fixed "market basket" of several thousand goods and services purchased by households

Front 6

Federal Budget Deficit

Back 6

federal government tax revenues minus outlay

Front 7

Trade Deficit

Back 7

the excess of imports over exports

Front 8

Aggregate Demand

Back 8

the sum of the demands for current output by each buying sector of the economy; households, businesses, the government, and foreign purchases of exports

Front 9

Capital Goods

Back 9

capital resources such as factories and machinery used to produce other goods

Front 10

Depreciation

Back 10

portion of the capital stock that wears out each year

Front 11

Consumption

Back 11

household sector's demand for output for current use

Front 12

Investment

Back 12

part of GDP purchased by the business sector plus residential construction

Front 13

Government Purchases

Back 13

goods and services that are the part of current output that goes to the government sector- the federal government as well as state and local governments

Front 14

Net Exports

Back 14

total exports minus imports

Front 15

National Income

Back 15

sum of the earnings of all factors of production that come from current production

Front 16

Net National Product

Back 16

GNP minus depreciation

Front 17

Personal Income

Back 17

measure of income received by persons from all sources

Front 18

Nominal GDP

Back 18

GDP measured in current dollars

Front 19

Implicit GDP Deflator

Back 19

index of the prices of goods and services included in GDP

Front 20

Producer Price Index (PPI)

Back 20

measure the wholesale prices at approximately 3000 items

Front 21

Potential Output

Back 21

level that would be reached if productive resources (labor and capital) were being used at benchmark high levels

Front 22

Monetary Policy

Back 22

current bank's use of control of the money supply and interest rates to influence the level of economic activity

Front 23

Money

Back 23

whatever is commonly accepted as payment in exchange for goods and services

Front 24

Production Function

Back 24

summarizes the relationship between total inputs and total outputs assuming a given technology

Front 25

Marginal Product of Labor (MPN)

Back 25

the addition to total output due to the addition of a unit of labor (the quantity of other inputs being held constant)

Front 26

Aggregate Supply Function

Back 26

macroeconomic analog to the individual market supply curve, which shows the output forthcoming at each level of product price. The aggregate supply curve shows the total output firms will supply at each value of the aggregate price level

Front 27

Quantity Theory of Money

Back 27

classical theory stating that the price level is proportional to the quantity of money

Front 28

Velocity of Money

Back 28

rate at which money turns over in GDP transactions during a given period: that is, the average number of times each dollar is used in GDP transactions

Front 29

Cambridge Approach

Back 29

a version of the quantity theory of money that focuses on the demand for money (Md=kPY)

Front 30

Consumption Function

Back 30

the Keynesian relationship between income and consumption

Front 31

Marginal Propensity to Consume (MPC)

Back 31

the increase in consumption per unit increase in disposable income

Front 32

marginal Propensity to Save (MPS)

Back 32

the increase in saving per unit increase in disposable income

Front 33

Autonomous Expenditure Multiplier

Back 33

gives the change in equilibrium output per unit change in autonomous expenditures (e.g. government spending)

Front 34

Autonomous Expenditures

Back 34

expenditures that are largely determined by factors other than current income

Front 35

Balanced-Budge Multiplier

Back 35

gives the change in equilibrium output that results from a 1-unit increase or decrease in both taxes and government spending