Basics of Macroeconomics

Vocabulary flashcards from lecture notes on macroeconomics.

Economics

A social science that studies the production, distribution, and consumption of goods and services.

Neoclassical Economics

The study of the allocation of scare resources among unlimited wants.

Heterodox Economics

The study of social creation and social distribution of society’s resources.

Circular Flow Model

An economic model that illustrates how money moves from producers to consumers and back again in an endless loop.

Microeconomics

Focuses on individuals and their motivations, relations, and actions.

Meso economics

Focuses on groups and organisations (or institutions such as social norms) firms, sectors, specific markets, as well as subsystems like the financial system that shape the economy.

Macroeconomics

Focuses on Systems and structures such as the environment or capitalism.

Scarcity

The fundamental economic problem of necessitating efficient allocation of limited resources to meet unlimited wants and needs.

Business Cycle

Fluctuations in credit, unemployment, and inflation.

Global Financial Crisis (GFC)

The 2007–2009 Global Financial Crisis had devastating effects on employment and housing worldwide, especially in the United States and Europe and was the biggest economic crisis since the Great Depression of the 1930s.

Globalization

Multifaceted process of growing interdependence of world economies.

Economic globalization

The increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.

Multinational Corporation (MNC)

A company that operates in more than one country.

Global Supply Chains

Otherwise known as global value chains, incorporate critical components or sophisticated materials that require specialized technological skills to make and is based on the least cost rule.

Stagflation

An economic situation characterized by three key conditions occurring simultaneously: stagnant economic growth, high inflation and high unemployment.

Paradox of thrift

Thinking that on macro level savings determine investments is a good example of compositional fallacies, that is errors in logic that arise when we infer that something which is true at the individual level, is also true at the aggregate level.

Saving

A RESIDUAL accounting term, not actually a "thing" or an "action" where Saving = Income - Spending - Taxes. The residual of what was not spent or paid in taxes from income.

Savings

One's funds in the bank or in bank-like accounts (savings accounts) or a person's entire financial wealth (bank accounts, investments, etc.).

Keynesian economics

Macroeconomic perspective that did not hold during the stagflation of the 1970s, due to a combination of slow growth, rising unemployment, and high inflation, which challenged.

Rational Expectations Theory

Theory developed by Robert Lucas

Lucas Critique

Critique of macroeconomic policy

Washington Consensus

Set of neoliberal policies of global institutions focused on international finance, development, and trade such as IMF, WB and WTO