Macroeconomics Lecture Notes - May 2025

Flashcards for key concepts and terminology from the Macroeconomics lecture notes.

National Income Accounting

The measurement of a country's economic activity through the value of all goods and services produced in a given year.

Output Method

A way to measure national income that calculates the value of all finished goods and services without double counting.

Income Method

A method of measuring national income that sums all incomes earned in the economy, including wages, rent, interest, and profit.

Expenditure Method

A method of measuring national income based on total spending in the economy, including consumption, investment, government spending, and net exports.

Gross Domestic Product (GDP)

The total value of all final goods and services produced within a country's borders in a given year.

Nominal GDP

GDP measured at current market prices without adjusting for inflation.

Real GDP

GDP adjusted for inflation, reflecting the true value of goods and services over time.

Purchasing Power Parity (PPP)

A method of measuring economic productivity and standards of living, comparing different countries' currencies through a 'basket of goods' approach.

Gross National Income (GNI)

GDP plus net income received from abroad, accounting for resources used or earned from foreign investments.

Inflation

The sustained increase in the general price level of goods and services in an economy over time.

CPI (Consumer Price Index)

An index measuring the average change over time in the prices paid by consumers for a basket of goods and services.

Deflation

The sustained decrease in the general price level of goods and services in an economy.

Economic Growth

An increase in a country's production of goods and services, typically measured by GDP over time.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Progressive Tax

A tax system where the tax rate increases as the taxable amount increases, placing a heavier burden on higher incomes.

Monetary Policy

The process by which a central bank manages money supply and interest rates to influence economic activity.

Fiscal Policy

Government adjustments to spending and tax policies to influence economic activity and achieve macroeconomic objectives.

Supply-Side Policies

Economic policies aimed at increasing the productive capacity of the economy by enhancing the quality and quantity of labor and capital.

Business Cycle

Fluctuations in economic activity characterized by periods of economic expansion and contraction.

Lorenz Curve

A graphical representation used to illustrate the distribution of income or wealth within an economy.

Gini Coefficient

A statistical measure of income or wealth inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).