Economics and the Goods Market

These flashcards cover essential vocabulary and definitions from the topics in the lecture on economics and the goods market, including methods of measuring GDP, concepts of aggregate demand, and various economic models and their impacts.

Aggregate Demand (AD)

The total spending on goods and services made within a country, represented as AD = C + I + G + X - IM.

Gross Domestic Product (GDP)

A measure of aggregate output that quantifies the total value of goods and services produced in a country.

Expenditure Method

A way of measuring GDP by adding up all expenditures necessary to purchase the nation’s production.

Human Development Index (HDI)

A composite statistic of life expectancy, education level, and Gross National Income per capita, but it does not account for inequalities.

Ecological Footprint

A measure of how much nature we have and how much we use, including when resource use exceeds the Earth's capacity.

Endogenous Variables

Variables that depend on other variables within the model.

Exogenous Variables

Variables that are not explained within the model but are taken as given.

Marginal Propensity to Consume (MPC)

The increase in consumer spending that occurs with an increase in disposable income.

Multiplier Effect

The phenomenon where an increase in spending results in an increase in national income and consumption, creating a cumulative effect.

Natural Rate of Unemployment

The level of unemployment that exists when the economy is at full employment.

Phillips Curve

A model showing the relationship between inflation and unemployment, traditionally indicating a trade-off.

Demand-Pull Inflation

Inflation that occurs when demand for goods and services exceeds their supply.

Cost-Push Inflation

Inflation caused by an increase in the prices of inputs, leading to a decrease in the supply of goods.

Deflationary Spiral

A situation where falling prices lead to reduced production, layoffs, and further decreases in demand and prices.

Steady State

A condition in the Solow Growth Model where capital per effective worker remains constant over time.

Solow Growth Model

An economic model that describes long-term economic growth driven by capital accumulation, population growth, and increases in productivity.