(Ch 4) Macroeconomics: The Bird’s-Eye View of the Economy

A vocabulary set covering key macroeconomic concepts from the lecture notes (Chapter 4), suitable for quick review and exam prep.

Great Depression

A severe, long-lasting economic downturn in the 1930s characterized by sharply falling output, massive unemployment, and a collapsing financial system, prompting macroeconomic policy responses.

Macroeconomic policy

Government actions designed to influence the performance of the overall economy, including monetary, fiscal, and structural measures.

Standard of living

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

Economic growth

The sustained rise in the economy's output of goods and services over time.

Output

The total value of goods and services produced in an economy.

Output per worker

Average output produced by each worker; a measure of productivity at the worker level.

Productivity

Output per unit of input, typically per worker or per hour; a measure of production efficiency.

Unemployment rate

The percentage of the labor force that is unemployed and actively seeking work.

Inflation rate

The rate at which the general price level rises over time.

Monetary policy

Policy actions that manage the money supply and interest rates, usually by a central bank.

Fiscal policy

Government decisions about spending and taxation that influence overall economic activity.

Structural policy

Policies aimed at changing the economy's underlying structure or institutions.

Positive analysis

An analysis of the economic consequences of a policy or event, without judgments about desirability.

Normative analysis

An analysis that evaluates what should be done, involving the analyst's value judgments.

Aggregation

The process of summing individual economic variables to obtain economy-wide totals; a bird's-eye view of the economy.

Aggregate statistics

Broad measures that summarize data across categories, such as crime rates or unemployment rates.

Exports and imports as share of GDP

Exports and imports expressed as a percentage of GDP, showing trade's contribution to overall output.

Trade balance

The difference between exports and imports; a deficit occurs when imports exceed exports, a surplus when exports exceed imports.

Exports

Goods and services produced domestically and sold to other countries.

Imports

Goods and services produced abroad and purchased domestically.

Central bank

The institution that controls a nation's money supply and monetary policy (e.g., the Federal Reserve).

Deficit

A situation where government spending exceeds tax revenue.

Surplus

A situation where tax revenue exceeds government spending.

Economic interdependence

The increasing interconnectedness of economies through trade and financial flows.

Microeconomics vs Macroeconomics

Micro focuses on individual markets and firms; macro studies the economy as a whole and aggregates.

Bird’s-eye view

A macroeconomic perspective focusing on economy-wide aggregates rather than individual details.