Vocabulary Flashcards for ECON 2120: Macroeconomics

Flashcards covering key vocabulary terms and concepts from the Principles of Macroeconomics course.

Inflation

A general increase in prices and fall in the purchasing value of money.

Velocity of Money

The speed at which money is exchanged in an economy.

Real GDP

The measure of a country's economic performance adjusted for inflation.

Disinflation

A reduction in the rate of inflation.

Deflation

A decrease in the general price level of goods and services.

Money Neutrality

The concept that changes in the money supply do not affect real GDP in the long run.

Purchasing Power

The financial ability to buy products and services.

Price Confusion

When inflation makes price signals hard to interpret.

Money Illusion

When people confuse nominal prices with real prices due to inflation.

Nominal Rate of Return

The rate of return without adjusting for inflation.

Real Rate of Return

The nominal rate of return adjusted for inflation.

Fisher Effect

The phenomenon where nominal interest rates increase with expected inflation rates.

Inflation Tax

The economic concept where inflation effectively reduces the value of money held by the public.

Redistribution of Wealth

The transfer of wealth from one group to another as a result of economic policies or changes, such as inflation.

Cost of Inflation

The negative economic impacts of rising prices, such as reduced purchasing power.

Equilibrium Real Rate

The interest rate that balances the supply and demand for loanable funds.

Unanticipated Inflation

Inflation that is not expected and can redistributes wealth unexpectedly.

Capital

Assets that can enhance a person's power to perform economically useful work.

Labor

The human effort that is used in the production of goods and services.

Technological Knowledge

The understanding and skills required to produce goods and services.

Inflation Data

Statistics that reflect the changes in price levels over time.

Economic Panic

A period of widespread fear about the economy which can affect consumer behavior.

Higher Wages

Increases in salary that may occur due to inflation but do not increase real purchasing power.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Loanable Funds

The market where borrowers and lenders come together to make loans.

Market Price Signals

Indications provided by price changes in the market concerning the value of resources.