American economic crisis set #1

competitive equilibrium

when demand curve sloping down and the supply slope curving up cross

aggregate output

overall production level of a country

economic model

a simplified description of real economy

quantity demanded

the amount of the good or service that buyers demand

quantity supplied

the amount of the good or service that sellers are willing to supply

aggregate supply

the economy's overall supply of goods and services

aggregate demand

the economy's overall demand for goods and services

GDP

the market value of the final goods produced in a country

aggregate accounting identity

Production = Income = Expenditure.

National Income Accounting Identity for expenditure-based GDP

the total value of spending on goods and services in the domestic economy

Y ≡ C + I + G + (X - M)

employed

those holding full-time or part-time paid jobs

unemployed

potential workers that do not have a paid job

labor force

all the unemployed and employed workers

discouraged workers

potential workers who would like to have a job but have given up looking for one

underemployed workers

workers in difficult economic circumstances who would like to work more

nominal wages

the actual wages that workers are paid.

real wages

wages that are adjusted for inflation.

voluntary employment

workers who are voluntarily unemployed

frictional employment

unemployment from people that are in between jobs

wage rigidity

the market wage is held above the competitive equilibrium level that would clear the labor market.

structural unemployment

A persistent imbalance between people who want to work and employers that want to hire.

cyclical unemployment

The actual unemployment rate minus the natural rate.

money

people use to make and receive payments when buying and selling goods

nominal GDP

the total value of production using prices from the year the output was produced

inflation

the tendency for average prices to increase over time.

real GDP

the total value of production using fixed prices taken from a particular base year,

deflation

the rate of decrease of a price index

the Fed (central bank in US)

the government institution that monitors financial institutions,

the feds dual mandate

low levels of inflation and
maximum levels of employment

federal funds rate

The interest rate that banks charge each other for overnight loans

monetary policy

promote maximum employment, stable prices, and moderate long-term interest rates

fiscal policy

influences the economy through government spending

leading indicators

point towards future economic shifts

lagging indicators

confirm economic shifts that are already in motion / after the fact