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Exam III: Chapters 9-11
Macroeconomics
10
Economics
Undergraduate 1
11/16/2011

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Term
Business Cycle
Definition
Alternating periods of economic expansion and economic recession.
Term
Long-run Economic Growth
Definition
The process by which rising productivity increases the average standard of living.
Term
Labor Productivity
Definition
The quantity of goods and services that can be produced by one worker or by one hour of work.
Term
Capital
Definition
Manufactured goods that are used to produce other goods and services.
Term
Potential GDP
Definition
The level of real GDP attained when all firms are producing at capacity.
Term
Financial System
Definition
The system of financial markets and financial intermediaries through which firms acquire funds from households.
Term
Financial Markets
Definition
Markets where financial securities, such as stocks and bonds, are bought and sold.
Term
Financial Intermediaries
Definition
Firms,such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers.
Term
Market for Loanable Funds
Definition
The interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged.
Term
Crowding Out
Definition
A decline in private expenditures as a result of an increase in government purchases.
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