Economics And Personal Finance - Unit 5: Macroeconomics

Balance Of Trade

The difference between a country's total exports and total imports. Also known as "net exports."

Business Cycle

The fluctuating levels of economic activity in an economy over a period of time measured from the beginning of one recession to the beginning of the next.

Command Economy

An economic system where the government owns the resources and decides what goods and services are produced, how they are produced, and who gets them. The government decides the prices of goods, services, and resources.

Comparative Advantage

The ability to produce at a lower opportunity cost than another producer.

Contractionary Policy

Actions taken by the Federal Reserve to increase interest rates and thereby discourage spending by consumers and businesses.

Consumer Price Index (CPI)

A measure of average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Cyclical Unemployment

Unemployment associated with recessions in the business cycle.

Demand

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.

Embargo

A government order that limits or prohibits trade with a particular country or group of countries.

Equilibrium Price

The price at which quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect.

Expansionary Policy

Actions taken by the Federal Reserve to lower interest rates and thereby encourage spending by consumers and businesses.

Globalization

The spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures.

Inflation

A general, sustained upward movement of prices for goods and services in an economy.

Fiscal Policy

Spending and taxing policies of the federal government to influence the economy.

Frictional Unemployment

Unemployment that results when people are new to the job market (for example, recent graduates) or are transitioning from one job to another.

Keynesian Economics

A macroeconomic theory of total spending in the economy and its effects on output, employment, and inflation.

Market Economy

An economic system in which decisions about what goods and services are produced, how they are produced, and who gets them are made by buyers and sellers who meet to exchange goods, services, and resources. The buyers and sellers decide the prices of goods, services, and resources.

Mixed Economy

An economic system where buyers and sellers meet to exchange goods and services and decide on price with some government involvement in the economy.

Monetary Policy

Central bank actions involving the use of interest rate or money supply tools to achieve such goals as maximum employment and stable prices.

Nominal GDP

The total market value of all final goods and services produced in an economy in a given year, expressed using the current year's price for goods and services. Also known as current-dollar GDP.

Opportunity Cost

The best thing given up when a choice is made; the second choice.

Per Capita GDP

Gross domestic product (GDP) divided by the total population of a country.

Production Possibility Curve

A graphic representation of output combinations that can produced given an economy's available resources and technology.

Real GDP

The total market value of all final goods and services produced in an economy in a given year calculated by using a base year's price for goods and services; nominal gross domestic product (GDP) adjusted for inflation.

Recession

A period of declining real income and rising unemployment. A significant decline in general economic activity extending over a period of time.

Sanction

States use economic pressure (trade and financial restrictions) against other states to create policy or behavioral change.

Scarcity

The condition that exists because there are not enough resources to produce everyone's wants.

Socialist Economy

A populist economic and political system based on collective, common, or public ownership of the means of production.

Structural Unemployment

Long-term joblessness caused by a mismatch in the skills held by those looking for work and the skills demanded by those seeking workers.

Supply

The quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.

Supply Side Economics

The idea that increasing the supply of goods yields economic growth.

Tariff

A tax that must be paid before a good may be brought into a country.

Traditional Economy

A system where goods production and distribution are driven by culture, and traditions.