Unit 4 Study Guide: Macroeconomics

Flashcards covering key concepts in macroeconomics, including GDP, inflation, unemployment, and the Federal Reserve.

Macroeconomics

The study of the economy as a whole, focusing on large scale factors like national output (GDP), inflation, unemployment, and economic growth.

Gross Domestic Product (GDP)

The total market value of all the finished goods and services produced within a country's borders in a specific time period.

Consumer Price Index (CPI)

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

Inflation

An increase in the price level in an economy over time, leading to a decrease in the purchasing power of the dollar.

Real GDP

GDP adjusted for inflation to reflect the true value of goods and services.

Unemployment Rate

The percentage of the labor force that is unemployed, calculated by the formula: (Unemployed persons / Total labor force) x 100.

Types of Unemployment

Include Cyclical, Frictional, Structural, and Seasonal unemployment.

Cyclical Unemployment

Unemployment caused by the general downturns in the business cycle, leading to lack of demand for goods and services.

Frictional Unemployment

Temporary unemployment that occurs when people are in between jobs or searching for their first job.

Structural Unemployment

Longer-lasting unemployment caused by fundamental shifts in the economy, such as technological advancements.

Seasonal Unemployment

Unemployment occurring at specific times of the year due to the nature of certain jobs.

Fiscal Policy

Government policies regarding taxation and spending to influence the economy.

Surplus

When government revenue exceeds government spending in a given fiscal year.

Deficit

When government spending exceeds government revenue in a given fiscal year.

National Debt

The total amount of money that the federal government owes to its creditors (accumulated deficits over time).

Federal Reserve (FED)

The central bank of the United States, which conducts monetary policy, supervises and regulates banks, and provides financial services.

Monetary Policy

The process by which the Federal Reserve manages the money supply and interest rates to achieve macroeconomic goals.

Interest Rates

The cost of borrowing money, which can be influenced by the Federal Reserve to impact economic activity.