Economics Principles and Macroeconomic Indicators

A set of vocabulary flashcards covering fundamental economic concepts, GDP variations, monetary policy, and labor market terms based on the lecture transcript.

Marginal cost

The study of the costs and benefits of doing a little bit more of an activity versus a little bit less.

Production possibilities curve

A model that illustrates the trade-offs facing an economy that produces only two goods, showing the maximum quantity of one good that can be produced for each possible quantity of the other good produced.

Federal Reserve

The central bank that oversees the safety and stability of the U.S. banking system.

Reserve requirement

When the central bank lowers this on deposits, the money supply increases and interest rates decrease.

Division of labor

The way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

Microeconomics

The study of how people make decisions and how those decisions interact.

Macroeconomics

The branch of economics concerned with the overall ups and downs in the economy.

Circular flow diagram

A model where households and businesses work together to exchange income for provided goods and services.

Wage cost increase

A scenario where costs increase by $20\%$, which the transcript identifies as a decrease in the cost of production that shifts the supply curve of the product to the left.

Law of Demand

The principle that if the price of a good increases, buyers desire to purchase less of it.

GDP per capita

$\text{GDP}$ divided by the population; considered the most important source of increase in a nation's standard of living.

Real GDP

The amount of goods and services actually sold in a nation.

Nominal GDP

The total market value of all final goods and services produced within a country in a given period.

Productivity

Factors that result in higher national income, economic growth, improved living conditions, better healthcare, and more access to education.

Exchange rate

The price of one currency in terms of another currency.

Potential GDP

The maximum quantity that an economy can produce given full employment of its existing levels of labor, physical capital, technology, and institutions.

Interest rate

The rate of return for an investment, or the amount paid by a borrower for using money.

Expansionary monetary policy

A monetary policy that increases the supply of money and the quantity of loans.

Cyclically unemployed

A status where a worker is out of work because of temporary low demand associated with a recession.

Current account balance

A measure of goods, services, international income flows, and foreign aid.