Macroeconomics terms

Laissez-faire

Minimal government intervention in the running of the economy.

Revenue

Money taken in by the government.

Expenditures

Money spent by the government.

Balanced Budget

When expenditures and revenues are equal.

Deficit

When expenditures exceed the revenue.

Market economy

When individuals (Producers/Consumers) determine if something is made and the price.

Capitalism

Private individuals and business firms carry out production and exchange of goods through a network of markets.

Supply

Availability of a particular product or commodity.

Demand

How badly people want products and services.

Law of Supply & Demand

Too much supply of a product lowers the price; and great demand highers the price.

Budget

Spending plan of the government (Expenditures and revenues represent priorities of the government).

Boom

A period in the business cycle of extreme poverty.

Bust

A prolonged recession (Economic activity is on a decline).

Depression

A period in the business cycle of a serious downturn.

GDP (Gross Domestic Product)

The total value of all goods and services produced in a country annually.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for work.

Inflation

The general rise in prices of goods and services over time.

Monetary Policy

The process by which the central bank controls the money supply and interest rates to influence the economy.

Fiscal Policy

Government decisions on spending and taxation are used to influence economic activity.

Aggregate Demand

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

Aggregate Supply

The total output an economy’s producers are willing and able to supply at a given price level.

Interest Rate

The cost of borrowing money, often set or influenced by a central bank.

Budget Deficit

When a government spends more money than it collects in taxes.

Balance of Trade

The difference between a country's exports and imports of goods and services.

Currency Exchange Rate

The value of one country's currency in terms of another's.

Recession

A period of economic decline lasting at least two quarters, marked by reduced GDP and rising unemployment.

Stagflation

A situation where inflation and unemployment rise at the same time.

Multiplier Effect

The idea that an initial change in spending leads to a larger overall impact on the economy.

Supply Shock

A sudden change in the availability of a good or service, which can affect prices and output.