Fiscal and Monetary Policy Overview

These flashcards cover key concepts related to fiscal and monetary policy, GDP calculations, and economic indicators.

GDP Expenditure Approach

The method of calculating GDP by adding all money spent on final goods and services.

Nominal GDP

The current dollar value of GDP without adjusting for inflation.

Real GDP

GDP that has been adjusted for inflation, providing a more accurate reflection of an economy's size.

Real GDP per Capita

Real GDP divided by the population, used to measure economic health on a per-person basis.

The Business Cycle

The cycle that represents the expansion and contraction of economic activity over time.

Fiscal Policy

Economic policy that involves government spending and tax policies to influence the economy.

Monetary Policy

Policy implemented by a country's central bank to control the money supply and interest rates.

Contraction

A phase of the business cycle where economic activity is declining.

Expansion

A phase of the business cycle characterized by increasing economic activity.

Peak

The highest point of the business cycle before a downturn.

Recession

A period of economic decline characterized by falling GDP and rising unemployment.

Depression

A severe and prolonged downturn in economic activity.

Components of GDP

Consumption, Investment, Government Spending, and Net Exports.

Income Approach to GDP

Calculates GDP by adding up all of the income earned from production of goods and services.