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33 Cards in this Set
- Front
- Back
Economy
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describes the structure of economic life, economic activity, in a community, a region, a country, a group of countries, or the world.
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Gross Domestic Product
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the market value of all final goods and services produced in the nation during a particular period, usually a year.
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Gross Product
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which measures the market value of final goods and services produced in a particular geographical region during a period, one year.
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Gross World Product
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the market value of all final goods and services produced in the world during a given period, usually a year.
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Flow Variable
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a variable that measures something over an interval of time, such as your income per week.
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Stock Variable
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a variable that measures something at a particular point in time, such as the amount of money you have with you right now.
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Mercantilism
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the incorrect theory that a nation’s economic objective should be to accumulate precious metals in the public treasury; this theory promoted trade barriers to cut imports, but other countries retaliated, reducing trade and the gains from specialization.
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Economic Flactuations
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the rise and fall of economic activity relative to the long-term growth trend of the economy; also called business cycles
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Expansion
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a period during which the economy’s output increases
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Contraction
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a period during which the economy’s output declines
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Depression
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a sharp reduction in an economy’s total output accompanied by high unemployment lasting more than a year.
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Recession
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a sustained decline in the economy’s total output lasting at least two consecutive quarters, or six months; an economic contraction
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Inflation
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an increase in the economy’s average price level
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Production increased because of
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a) increases in the amount and quality of resources, especially labor & capital
b) better technology c) improvements in the rules of the game that facilitate production and exchange |
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Leading Economic Indicators
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variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes
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Coincident Economic Indicators
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variables that reflect peaks and troughs in economic activity as they occur; examples include employment, personal income, and industrial production.
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Lagging Economic Indicators
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variables that follow, or trail, changes in overall economic activity; examples include the interest rate and the average duration of unemployment.
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Aggregate Output
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a composite measure of all final goods and services produced in an economy during a given period; real GDP
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Aggregate Demand
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the relationship between the economy’s price level and aggregate output demanded, with other things constant
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Price Level
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a composite measure reflecting the prices of all goods and services in the economy relative to prices in a base year
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Real gross domestic product (real GDP)
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the economy’s aggregate output measured in dollars of constant purchasing power
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Aggregate Demand Curve
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a curve representing the relationship between the economy’s price level and real GDP demanded per period, with other things constant
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Aggregate Supply Curve
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a curve representing the relationship between the economy’s price level and real GDP supplied per period, with other things constant
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Federal Budget Deficit
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a flow variable measuring the amount by which federal government outlays exceed federal government revenues in a particular period, usually a year
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Demand-side Economics
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macroeconomic policy that focuses in shifting the aggregate demand curve as a way of promoting full employment and price stability
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Stagflation
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a contraction, or stagnation, of a nation's output accompanied by inflation in the price level
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Supply-side Economics
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macroeconomic policy that focuses on a rightward shift of the aggregate supply curve through tax cuts or other changes to increase production incentives
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Federal Debt
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a stock variable that measures the net accumulation of annual federal deficits
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Real GDP Per Capita
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real GDP divided by the population; the best measure if an economy's standard of living
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Discuss macroeconomics and the national economy
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Macroeconomics concerns the overall performance of the national economy. A standard measure of performance is the growth of real gross domestic product, or real GDP, the value of final goods and services produced in the nation during the year.
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Discuss economic fluctuations and growth.
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The economy fluctuates between two phases: periods of expansion and periods of contraction. No two business cycles are the same.
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Explain aggregate demand and aggregate supply.
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The aggregate demand curve slopes downward, reflecting a negative or inverse relationship between the price level and real GDP demanded. The aggregate supply curve slopes upward, reflecting a positive or direct relationship between the price level and real GDP supplied. The intersection of the two curves determines the economy’s real GDP and price level.
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Describe the history of U.S. Economy
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John Maynard Keynes- economy is unstable.
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