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Macroeconomics

The study of the economy in aggregate, focusing on total economic activity.

Macroeconomic Goals

The three main goals are Full Employment, Price Stability, and Economic Growth.

Fiscal Policy

Government policies related to taxation and spending to influence the economy.

Monetary Policy

Central bank policies that manage money supply and interest rates to influence economic activity.

Business Cycle

The fluctuations in economic activity measured peak to peak, including expansion and contraction.

Expansion

A period of economic growth marked by increasing output following a trough.

Contraction

A phase in the business cycle where economic activity declines, possibly leading to a recession.

Demand-Pull Inflation

Inflation caused by an increase in aggregate demand that outstrips aggregate supply.

Cost-Push Inflation

Inflation caused by rising costs of production, leading to decreased supply.

Aggregate Demand (AD)

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

Aggregate Supply (AS)

The total supply of goods and services that firms in an economy plan to sell during a specific time period.

Horizontal AS Curve

A shape of aggregate supply indicating that output can increase without raising prices in the short run.

Upsloping AS Curve

A shape of aggregate supply indicating that output increases with rising price levels.

Vertical AS Curve

A representation of aggregate supply in which output is fixed, regardless of price level changes.

Real GDP

The inflation-adjusted value of goods and services produced, reflecting actual output.

Long-Run Equilibrium

A situation where aggregate supply and aggregate demand are equal at the natural level of output.