Macroeconomics: The Bird's-Eye View of the Economy - Vocabulary Flashcards

Vocabulary flashcards covering core macroeconomic concepts and policy topics from the lecture notes.

Macroeconomics

The study of economy-wide phenomena (inflation, unemployment, growth) and policy tools, using aggregation to analyze the whole economy.

Aggregation

The adding up of individual economic variables to obtain economy-wide totals, enabling a bird's-eye view of the economy.

Bird's-eye view

A high-level view of the economy obtained by using aggregate statistics rather than individual data.

Positive analysis

An analysis that describes the economic consequences of a policy or event without judging desirability.

Normative analysis

An analysis that asks whether a policy should be used, incorporating the analyst's values.

Monetary policy

Policy that determines the money supply, typically conducted by the central bank (in the U.S., the Federal Reserve System).

Fiscal policy

Policy decisions about government spending and tax revenues, affecting deficits or surpluses.

Structural policy

Policies aimed at changing the underlying structure or institutions of the economy.

Central bank

The institution that controls the nation's money supply; in the U.S., the Federal Reserve System.

Deficit

A situation in which government spending exceeds tax revenues.

Surplus

A situation in which tax revenues exceed government spending.

Unemployment rate

The percentage of the labor force that is unemployed; tends to rise during recessions and cannot be negative.

Inflation rate

The rate at which general prices are rising; varies over time and across countries (e.g., high in the 1970s, 8% in 2022).

Output (GDP)

The total value of goods and services produced in an economy; a measure of the economy's size (e.g., U.S. output in 2022 was about 18 times its 1929 level).

Output per worker (labor productivity)

Output divided by the number of workers; a measure of efficiency (e.g., in 2022, output per worker was over five times the 1929 level).

Output per person

Output divided by the population; a measure of average living standards.

Standard of living

The degree to which people have access to goods and services that improve well-being.

Economic growth

A process of steady increases in the quantity and quality of goods and services an economy can produce.

Exports

Goods and services produced domestically and sold to other countries.

Imports

Goods and services produced abroad and purchased by residents.

Trade deficit

When exports are less than imports; imports exceed exports.

Trade surplus

When exports exceed imports; exports exceed imports.

Trade interdependence

The increasing interdependence of national economies through trade and financial flows.

Great Depression

A severe worldwide economic downturn with massive unemployment and output declines (e.g., U.S. unemployment reached 25%, factories cut production; stock values fell dramatically).

Stock market crash

A rapid fall in stock prices that contributed to the onset of the Great Depression.