Macroeconomics: Key Terms
This flashcard deck provides a concise overview of essential macroeconomics key terms. Designed for students, it covers fundamental concepts from GDP and inflation to fiscal and monetary policies, preparing you for exams and strengthening your foundational understanding of the economy.
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What is GDP?
The market value of all final goods and services produced within a country in a given period.
How does GDP differ from GNP?
GDP counts production inside the country's borders; GNP counts production by its residents wherever it happens.
What are the components of aggregate demand?
Consumption, investment, government spending and net exports: C + I + G + NX.
What are net exports?
Exports minus imports; positive is a trade surplus, negative a deficit.
What does the Consumer Price Index measure?
The average change in prices paid by urban consumers for a fixed basket of goods and services.
What is frictional unemployment?
Short-term unemployment while people search for or move between jobs.
What is structural unemployment?
Unemployment from a mismatch between workers' skills or locations and available jobs.
How is the unemployment rate calculated?
Unemployed ÷ labor force (employed + unemployed) × 100.
Why does the short-run aggregate supply curve slope upward?
Input prices such as wages are sticky, so a higher price level raises output in the short run.
What is fiscal policy?
Changes in government spending and taxes to influence the economy.
What is monetary policy?
A central bank's management of money, credit and interest rates.
What are the Federal Reserve's main policy tools today?
Interest on reserve balances, open market operations and the discount rate; reserve requirements have been 0% since March 2020.
What are the four phases of the business cycle?
Expansion, peak, contraction and trough.
What does currency appreciation do to trade?
Makes exports more expensive abroad and imports cheaper at home.
What is stagflation?
High inflation combined with stagnant growth and high unemployment.
What is the multiplier effect?
An initial change in spending causes a larger change in total income as it is re-spent.