Econ Midterm pt 2 (Ch 5)

Macroeconomics

The study of aggregate economic variables and policymaker choices affecting them.

Gross Domestic Product (GDP)

Market value of final goods and services produced in a country, measuring output and income from production.

Nominal GDP

Measured using current prices.

Real GDP

Measured using constant (base year) prices to account for inflation.

Gross National Product (GNP)

Output produced by a nation’s resources worldwide.

Full Employment

A key macroeconomic goal aimed at achieving stable GDP growth, high employment, and control of inflation.

Fiscal Policy

Changes in government spending/taxes proposed by the President or Congress, requiring legislative approval.

Monetary Policy

Policy conducted by the Federal Reserve, focusing on money supply and interest rates.

Business Cycle

GDP fluctuations that signify economic changes, such as expansion or recession.

Inflation

Sustained increase in average price levels, reducing money's purchasing power.

Unemployment Rate

Percentage of the labor force actively seeking work but not finding jobs.

Net Exports

Integral in determining GDP changes for economic expansion or contraction.

Exchange Rate

Value of one currency compared to another.

Interest Rate

Cost of borrowing money.

Money Supply

The total money in circulation that affects economic variables.

Per Capita GDP

GDP divided by the population; useful for cross-country comparisons.

Index of Sustainable Economic Welfare (ISEW)

An alternative measure focusing on sustainable economic practices.

Measure of Economic Welfare (MEW)

An alternative measure that focuses on quality of life and sustainability.

Deflation

A decrease in overall price levels.

Balance of Payments

A document recording the inflows and outflows of goods, services, and assets between countries.

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level.

Aggregate Supply

The total supply of goods and services that firms in an economy plan to sell at a given overall price level.