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16 Cards in this Set
- Front
- Back
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Self-regulating economy
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Problems such as unemployment are resolved without government intervention, through the working of the invisible hand
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Keynesian Economics
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economic slumps are caused by inadequate spending and they can be mitigated by government intervention
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Monetary Policy
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Uses changes in the quantity of money to alter interest rates and affect overall spending
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Fiscal Policy
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Uses changes in government spending and taxes to affect overall spending
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Recessions
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or contractions, are periods of economic downturn when output and employment are falling
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Expansions
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or recoveries, are periods of economic upturn when output and employment are rising
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Business cycle
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the short-run alternation between recessions and expansions
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Business cycle peak
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the point at which the economy turns from expansion to recession
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Business cycle trough
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the point at which the economy turns from recession to expansion
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Inflation
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Rising overall level of prices
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Deflation
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Falling overall level of prices
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Price Stability
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when the overall level of prices changes slowly or not at all
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Long-run Economic Growth
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is the sustained upward trend in the economy's output over time
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Open Economy
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is an economy that trades goods and services with other countries
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Trade Deficit
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When the value of goods and services bought from other countries is more than the value of goods and services it sells to other countries
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Trade Surplus
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When the value of goods and services bought from other countries is less than the value of goods and services it sells to other countries
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