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Macroeconomics
Frank and Bernanke principles of macroeconomics chaps 4-7
24
Economics
Undergraduate 2
02/18/2008

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Term
Cause of the Great Depression
Definition
poor economic policymaking both in the usa and other major industrialized countries.
Term
Aggregation
Definition
the adding up of individual economic variables to obtain economywide totals
Term
GDP
Definition
The market value of the final goods and services produced in a country during a given period
Term
Final Goods and Services
Definition
Goods or services consumed by the ultimate user; end products of the production process.
Term
Government purchases
Definition
purchases by federal, state, and loval governments of final goods and swervices; government purchases DO NOT INCLUDE transfer payments, or payments to the people or interest.
Term
Discouraged Worker
Definition
people who say they would like to have a job but have not made an effort to find one in the last four weeks
Term
Indexing
Definition
the practice of increasing a nominal quantity each period by an amount equal to the percentage increase in a specific price index. prevents the purchasing power of the nominal quantity from being eroded by inflation
Term
Nominal GDP
Definition
a measure of FDP in which the quantities produced are valued at current year price the current dollar value of production
Term
fiscal policy
Definition
taxes
Term
Real GDP
Definition
A measure of GDP in which the quantities produced are valued at the prices in a base year rather than at current prices, measures the actual physical volume of production.
Term
monetary policy
Definition
federal reserve and central bank
Term
structural policy
Definition
structure and institutions of society
Term
net exports
Definition
exports - imports
Term
value added
Definition
market value - cost of inputs
Term
investment
Definition
spending on capital goods, new machines, new shopping centers, changes in inventory (end minus beginning), business fixed investment
Term
economic costs of growth
Definition
sacrifice consumption, sacrifice health and leisure, costs of aquiring R&D, and human capital
Term
human capital
Definition
talents education training, skills of workers,
Term
physical capital
Definition
tools factories, machines, cause efficiency
Term
Fischer Effect
Definition
tendency for nominal interest rates to be high when inflation is high and low when inflation is low
Term
determinants of average labor productivity
Definition
human capital, physical capital, land and natural resources, technology, entrepreneurship and management, political and legal environment.
Term
inflation reduces economic efficiency through all of the following channels
Definition
-distorting incentives through interaction with the tax laws
-obscuring information transmitted by prices
-inducing people to minimize cash holdings
-interfering with long term planning
Term
increases in output per person arise primarily from
Definition
increases in average labor productivity
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