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Macroeconomics
type of economics that studies how the choices of consumers, businesses, and the government affect the overall economy
Macroeconomic Indicators
data points that reflect how well the economy is doing. Examples include GDP, CPI, interest rates, unemployment, etc.
Gross Domestic Product (GDP)
the total monetary value of all the goods and services that are made that year in a country. This value helps you see the size of a country’s economy and how it is doing.
Consumer Price Index (CPI)
measures inflation in the economy by comparing how prices for goods and services have changed over time
Inflation
the rate that prices increase over time due to the decreasing power of the dollar.
Labor Market
The supply and demand of labor where employers (demand) are looking to hire employees(supply) for labor.
Unemployment rate
The percentage of people in the workforce that are unemployed (don’t have a job but are looking for one)
Commodity prices
the prices of raw materials or food
Stock Market
where investors buy and sell shares of companies
Retail Sales
tracks consumer demands for finished goods like cars and clothes
Interest Rates
the additional percentage you have to pay to borrow money.
Business Cycle
a graph used to show the overall state of the economy
Expansion
phase of economic growth in the business cycle where unemployment is low, GDP is growing, incomes and consumer spending is growing, etc.
Peak
turning point in the business cycle where expansion levels off and the economy begins to contract or shrink.
Contraction/Recession
phase in the business cycle where the economy is declining/shrinking. GDP is lowering, unemployment is rising, etc.
Depression
severe recession phase in a business cycle that can last for years and can have a global impact. Ex: the Great Depression lasted for 10 years.
Trough
turning point in business cycle where recession/contraction is ending and the economy will soon expand again.
Growth Trend
natural rate of GDP growth overtime in an economy. This is the rate of growth that we want the economy to have.
Fiscal Policy
When government uses taxes and government spending to influence the economy
Expansionary Fiscal Policy
When government increases spending and/or decreases taxes to help end a recession and grow the economy
Contractionary Fiscal Policy
When government decreases spending and/or increases taxes to slow down the economy and lower high inflation
Stimulus
money that the government gives to individuals or businesses to help “stimulate” (jumpstart) the economy
Monetary Policy
When Federal Reserve uses the money supply and interest rates to influence the economy
Federal Reserve/Fed
the central bank of the United States government
Expansionary Monetary Policy
When the Federal Reserve decreases interest rates and increases the money supply to help boost consumer spending during a recession. Increases inflation.
Contractionary Monetary Policy
When the Federal Reserve increases interest rates and decreases the money supply to help slow economic growth and lower inflation
Banks
institutions that distribute funds from those who deposit money into the bank to those who borrow money in the form of loans.
Labor Unions
an organization made up of workers in a particular field that try to promote higher pay, better working conditions, etc.
Wall Street
The street where the New York Stock Exchange (world’s largest stock market) is located.
U.S. Mint
The institution that produces all American coins including collector’s coins