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7-10
Vocab
61
Economics
Undergraduate 1
10/30/2013

Additional Economics Flashcards

 


 

Cards

Term
Gross domestic product
Definition
the market value of all final goods and services produced within a country during a specific period
Term
Intermediate goods
Definition
goods purchased for resale or use in producing another good or service
Term
Final market goods and services
Definition

 

1.       : goods and services purchased by their ultimate user

 

 

Term
Personal consumption
Definition
household spending on consumer goods and services during the current period. Consumption is a flow concept
Term
Private investment
Definition

 

1.       : the flow of private-sector expenditures on durable assets (fixed investments) plus the addition to inventories (inventory investment) during a period. These expenditures enhance our ability to provide consumer benefits in the future.

 

Term
Depreciation
Definition
the estimated number of physical capital that is worn out or used up producing goods during a period
Term
Inventory Investment
Definition
Changes in the stock of unsold goods and raw materials during a period
Term
Net exports
Definition
exports minus imports
Term
Exports
Definition
goods and services produced domestically but sold to foreigners
Term
Imports
Definition
Goods and services produced by foreigners but purchased by domestic consumers, businesses and governments
Term
Indirect business taxes
Definition
taxes that increase a business firm’s cost of production and therefore the prices are changed to consumers, examples are sales, excise, and property taxes.
Term
National Income
Definition
the total income earned by a country’s nationals (citizens) during a period. It is the sum of employee compensation, self-employment income, rents, interest, and corporate profits
Term
Gross National Product (GNP
Definition
The total market value of all final goods and services produced by the citizens of a country. It is equal to the GDP minus the net income of foreigners
Term
Net income of foreigners
Definition
: The income that foreigners earn by contributing labor and capital resources to the production of goods within the borders of a country minus the income the nationals of the country earn abroad
Term
Nominal values
Definition
values expressed in current dollars
Term
Real values:
Definition
values that have adjusted for the effect of inflation
Term
Consumer Price Index (CPI):
Definition
An indicator of the general level of prices. It attempts to compare the cost of purchasing the market basket bought by a typical consumer during a specific period with the cost of purchasing the same market basket during an earlier period
Term
GDP deflator
Definition
A price index that reveals the cost during the current period of purchasing the items included in GDP relative to the cost during a base year. Unlike the CPI the GDP deflator also measures the prices of capital goods and services purchased by business and governments. Because of this, it is thought to be a more accurate of changes in the general level of prices than the CPI
Term
Inflation
Definition
an increase in the general level of prices of goods and services. The purchasing power of the monetary unit, such as the dollar declines when inflation is present
Term
Nominal GDP
Definition
GDP expressed at current prices. It is often called “money GDP”
Term
Real GDP:
Definition
GDP adjusted for changes in price level
Term
Underground economy
Definition
unreported barter and cash transactions that take place outside recorded market channels. Some are otherwise legal activities undertaken to evade taxes. Others involve illegal activities, such as trafficking drugs and prostitution
Term
Business cycle:
Definition
Fluctuations in the general level of economic activity as measured by variables such as the rate of unemployment and changes in real GDP
Term
Recession
Definition
a downturn in economic activity characterized by declining real GDP and rising unemployment. In an effort to be more precise, many economists define a recession as two consecutive quarters in which there is a decline in real GDP
Term
Depression:
Definition
: a prolonged and very severe recession
Term
Civilian labor Force:
Definition
The number of people 16 years of age and over who are either employed or unemployed. To be classified as unemployed the person must be looking for a job
Term
Unemployed:
Definition
The term used to describe a person not currently employed who is either 1) actively seeking employment 2) waiting on a job to begin or to return to a job
Term
Labor force participation rate
Definition
The number of people in the civilian labor force 16 years of age or over who are either employed or actively seeking employment as a percentage of the total civilian population 16 years of age and over
Term
Unemployment rate:
Definition
: the percentage of unemployed people in the labor force. Mathematically it is the equal to the number of people unemployed divided by the number of people in the labor force
Term
Employment/population ratio
Definition
The number of people 16 years of age and over employed as civilians divided by the total civilian population 16 years of age and over. The ratio is expressed as a percentage.
Term
Frictional unemployment
Definition
unemployment due to constant changes in the economy that prevent qualified unemployed workers from being immediately matched up with existing job openings. It results from imperfect information and search activities related to suitably matching employees with employers
Term
Structural unemployment
Definition
unemployment due to the structural characteristics of the economy that make it difficult for job seekers to find employment and for employers to hire workers. Although job openings are available, they generally require skills many unemployed workers do not have
Cyclical Unemployment: unemployment due to recessionary business conditions and inadequate labor demand
Term
Full employment
Definition
The level of employment that results from the efficient use of the labor force taking into account the normal rate of unemployment due to information costs, dynamic changes, and the structural conditions of the economy. For the united States, full employment is thought to exist when approximately 95 percent of the labor force is employed
Term
Natural Rate of unemployment
Definition
the “normal” unemployment rate due to frictional and structural conditions in labor markets. It is the unemployment rate that occurs when the economy is operating at a sustainable rate of output.
Term
Potential Output
Definition
The level of output that can be achieved and sustained in the future, given the size of the labor force, its expected productivity, and the labor market. Actual output can differ from the economy’s potential output.
Term
Unanticipated inflation:
Definition
an increase in the general level of prices that was not expected by most decision-makers.
Term
Anticipated inflation
Definition
an increase in the general level of prices that was expected by the decision-makers
Term
Fiscal Policy
Definition
The use of government taxation and expenditure policies for the purpose of achieving macroeconomic goals.
Term
Monetary policy:
Definition
The deliberate control of the money supply, and in cases, credit conditions, for the purpose of achieving macroeconomic goals.
Term
Money supply
Definition
The supply of currency, checking account funds, and traveler’s checks. These items are counted as money because they are used as the means of payment for purchases.
Term
Resource market:
Definition
A highly aggregated market encompassing all resources (labor, physical capital, land, and entrepreneurship) contributing to the production of current output. The labor market is the largest component of the market.
Term
Goods and Services market
Definition
A highly aggregated market encompassing the flow of all final-user goods and services. The market counts all items that enter into GDP. Thus, real output in this market is equal to GDP
Term
Loanable fund market
Definition
a general term used to describe the market that coordinates the borrowing and lending decisions of business firms and households. Commercial banks, savings and loan associations, the stock and bond markets, and insurance companies are important financial institution in this market.
Term
Savings
Definition
The portion of after-tax income that is not spent consumption. Saving is a “flow” concept
Term
Foreign exchange market:
Definition
The market in which the currencies of different countries are bought and sold
Term
Exchange rate:
Definition
: The price of one unit of foreign currency in terms of the domestic currency. For example, if it takes $1.50 to purchase an English pound, the dollar-pound exchange rate is $1.50
Term
Aggregate demand curve
Definition
A downward-sloping curve showing the relationship between the price level and the quantity of domestically produced goods and services all households, business firms, governments, and foreigners (net exports) are willing to purchase.
Term
Aggregate supply curve:
Definition
The curve showing the relationship between a nation’s price level and the quantity of goods supplied by its producers. In the short run, it is an upward-sloping curve, but in the long run the aggregate supply curve is vertical.
Term
Equilibrium
Definition
a balance of forces permitting the simultaneous fulfillment of plans by buyers and sellers
Term
Money Interest Rate
Definition
The percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principal. The money interest rate overstates the real cost of borrowing during an inflationary period. When inflation is anticipated, an inflationary premium will be incorporated into this rate. The money interest rate is often called the nominal interest rate.
Term
Real Interest Rate
Definition
The interest rate adjusted for expected inflation: It indicates the real cost to the borrower in terms of goods and services
Term
Inflationary Premium
Definition
a component of the money interest rate that reflects compensation to the lender for the expected decrease, due to inflation, in the purchasing power of the principal and interest during the course of the loan. It is determined by the expected rate of future inflation
Term
Appreciation
Definition
An increase in the value of currency relative to foreign currencies. An appreciation increases the purchasing power of the currency over foreign goods.
Term
Depreciation
Definition
a reduction in the value of a currency relative to foreign currencies. A depreciation reduces the purchasing power of the currency over foreign goods
Term
Trade deficit
Definition
The situation when a country’s imports of goods and services are greater than its exports
Term
Trade surplus
Definition
The situation when a country’s exports of goods and services are greater than its imports
Term
Anticipated change
Definition
A change that is foreseen by decision-makers in time for them to make adjustments
Term
Unanticipated change
Definition
a change that decision-makers could not reasonably foresee. The choices they made prior to the change did not take it into account
Term
Consumer sentiment index:
Definition
a measure of the optimism of consumers based on their responses to a set of questions about their current and expected future personal economic situation. Conducted by the University of Michigan, it is based on a representative sample of U.S. households
Term
Productivity
Definition
The average output produced per worker during a specific time period. It is usually measured in terms of output per hour worked
Term
Supply check
Definition
An unexpected event that temporarily increases or decreases aggregate supply
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