Term
|
Definition
| an economy in which problems such as unemployment are resolved without government intervention, through the working of the invisible hand, and in which government attempts to improve the economy’s performance would be ineffective at best, and would probably make things worse. |
|
|
Term
|
Definition
| a school of thought emerging out of the works of John Maynard Keynes; according to Keynesian economics, a depressed economy is the result of inadequate spending and government intervention can help a depressed economy through monetary policy and fiscal policy. |
|
|
Term
|
Definition
| changes in the quantity of money in circulation designed to alter interest rates and affect the level of overall spending |
|
|
Term
|
Definition
| changes in government spending and taxes designed to affect overall spending. |
|
|
Term
|
Definition
| a period of economic downturn when output and unemployment are falling; also referred to as a contraction. |
|
|
Term
|
Definition
| period of economic upturn in which output and employment are rising; most economic numbers are following their normal upward trend; also referred to as a recovery |
|
|
Term
|
Definition
| the short-run alternation between economic downturns, known as recessions, and economic upturns, known as expansions. |
|
|
Term
|
Definition
| the point in time at which the economy shifts from expansion to recession |
|
|
Term
|
Definition
| the point in time at which the economy shifts from recession to expansion |
|
|
Term
|
Definition
| the sustained rise in the quantity of goods and services the economy produces. |
|
|
Term
|
Definition
| a rise in the overall level of prices. falls when economy is depressed and jobs are hard to find, rises when economy is booming and jobs are easy to find. discourages people from holding cash bc it loses its value over time |
|
|
Term
|
Definition
| a fall in the overall level of prices. encourages people to hold cash bc prices go up, which may deepen a reccession |
|
|
Term
|
Definition
| a situation in which the overall cost of living is changing slowly or not at all. |
|
|
Term
|
Definition
| an economy that trades goods and services with other countries. |
|
|
Term
|
Definition
| when the value of the goods and services bought from foreigners is more than the value of the goods and services sold to consumers abroad. Countries with high investment spending relative to savings run trade deficits. |
|
|
Term
|
Definition
| when the value of goods and services bought from foreigners is less than the value of the goods and services sold to them. countries with low investment spending relative to savings run trade surpluses. |
|
|
Term
|
Definition
| when families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending. This reduction in spending depresses the economy as consumers spend less and businesses react by laying off workers. As a result, families and businesses may end up worse off than if they hadn’t tried to act responsibly by cutting their spending. This is a paradox because seemingly virtuous behavior—preparing for hard times by saving more—ends up harming everyone. |
|
|
Term
|
Definition
| what the government can do to make macroeconomic performance better |
|
|
Term
|
Definition
| focuses on the overall behavior of the economy. |
|
|
Term
|
Definition
| focuses on decision-making by individuals and firms and the consequences of the decisions made. |
|
|
Term
| long-run growth per capita |
|
Definition
| a sustained upward trend in output per person—is the key to higher wages and a rising standard of living. |
|
|
Term
|
Definition
| the most widely used measure of the cost of living, |
|
|
