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42 Cards in this Set
- Front
- Back
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Aggregate planned expenditure |
The sum of planned consumption expenditure, planned investment, planned government expenditure on goods and services, and planned exports minus planned imports |
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Arbitrage |
Seeking to profit by buying in one market and selling for a higher price in another related market |
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Bank rate |
The interest rate that the bank of Canada charges big banks on loans |
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Bond |
A promise to make specified payments on specified dates |
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Canadian interest rate differential |
The Canadian interest rate minus the foreign interest rate |
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Chartered Bank |
A private firm, chartered under the Bank Act of 1991 to receive deposits and make loans |
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Classical |
A macroeconomist that believes the economy is self-regulating and always at full employment |
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Classical Growth Theory |
Growth of real GDP per person is temporary. When it rises above subsistence level, a population explosions brings it back to subsistence level |
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Core inflation rate |
Excludes volatile prices to reveal underlying inflation trend |
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Discretionary fiscal policy |
Initiated by an act of parliament |
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Employment rate |
Percentage of working age people with jobs |
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Equilibrium expenditure |
Level of aggregate expenditure that occurs when aggregate planned expenditure equals real GDP |
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Fiscal stimulus |
Use of fiscal policy to increase production and employment |
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Frictional unemployment |
Arises from normal labour turnover |
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Full employment |
Unemployment rate equals natural employment rate |
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Hyperinflation |
Inflation rate of 50% a month or higher that grinds economy to a halt and causes a society to collapse |
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Induced expenditure |
Consumption expenditure minus imports |
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Inflationary gap |
Real GDP exceeds potential GDP |
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Keynesian |
To achieve full employment, active help from fiscal policy and monetary policy is required |
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Labour force |
The sum of all people who are employed and unemployed |
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Laffer curve |
Relationship between the tax rate and the amount of tax revenue collected |
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Loanable funds market |
Aggregate of all individual markets in which households, firms, governments, banks, and other financial institutions borrow and lend |
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Long-run macroeconomic equilibrium |
A situation that occurs when real GDP equals potential GDP |
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M1 |
A measure of money that consists of currency held by individuals and businesses plus checkable deposits owned by individuals and businesses |
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M1 |
A measure of money that consists of currency held by individuals and businesses plus checkable deposits owned by individuals and businesses |
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M2 |
M1 plus all other deposits |
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Marginal propensity to consume |
The fraction of a change in disposable income that is spent on consumption. Calculated as change in consumption divided by change in disposable income. |
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Marginal propensity to import |
The fraction of a change in real GDP that is spent on imports Calculated as change in imports divided by change in real GDP |
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Marginal propensity to import |
The fraction of a change in real GDP that is spent on imports Calculated as change in imports divided by change in real GDP |
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Marginal propensity to save |
The fraction of a change in disposable income that is saved Calculated as the change in saving divided by the change in disposable income |
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Monetarist |
Economy is self regulating and will normally operate at full employment, provided monetary policy not erratic and pace of money growth kept steady |
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Money multiplier |
Ratio of the change in the quantity of money to the change in the monetary base |
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Multiplier |
Amount change in autonomous expenditure multiplied to determine change in equilibrium expenditure and real GDP |
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Natural unemployment rate |
The unemployment rate when economy is at full employment |
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Neoclassical growth theory |
Real GDP per person grows because technological change induces an amount of saving and investment that makes capital per hour of labour grow |
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New classical |
Business cycle fluctuations are the efficient responses of a well functioning market economy bombarded by shocks that arise from the uneven pace of technological change |
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New growth theory |
Real GDP per person grows because of choices people make in pursuit of profit and growth will persist indefinitely |
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New Keynesian |
Money wage rate as well as prices of goods and services are sticky |
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Potential GDP |
Value of production when all the economy’s labour, capital, land, and entrepreneurial ability are fully employed; the quantity of real GDP at full employment |
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Quantity theory of money |
In the long run, an increase in the quantity of money brings an equal percentage increase in the price level |
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Rent seeking |
Lobbying for special treatment by the government to create economic profit or to divert consumer surplus or producer surplus away from others |
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Stagflation |
Combination of inflation and recession |
