Macroeconomic Principles and Indicators

These flashcards cover key concepts related to macroeconomic policy objectives, GDP, business cycles, and well-being measures.

Economic Growth

Achieving a steady increase in Gross Domestic Product (GDP) over time to boost overall economic output and living standards.

Full Employment

Striving for low levels of unemployment where as many people as possible are engaged in productive work.

Price Stability

Maintaining a low and stable rate of inflation to avoid fluctuations in purchasing power and ensure economic predictability.

External Stability

Aiming for a favorable balance of payments, meaning that the value of exports and imports remains balanced to sustain economic health.

Income Distribution

Promoting equitable and fair income distribution to reduce economic inequality.

Factors of Production

Resources used to produce goods and services, including land, labor, capital, and entrepreneurship.

GDP (Gross Domestic Product)

The market value of all final goods and services produced within a country's borders in a specific time period.

GDP per capita

GDP divided by the population, used to measure individual economic contribution and living standards.

Purchasing Power Parity (PPP)

An adjustment of exchange rates to make the purchasing power of one currency equivalent across different countries.

Real GDP

GDP adjusted for inflation to reflect the true value of economic output.

Nominal GDP

Values goods and services at current prices without adjusting for inflation.

Business Cycle

The fluctuations in economic activity marked by phases of expansion, peak, contraction (recession), and trough.

Output Gap

The difference between potential and actual real GDP, indicating inefficiencies in resource utilization.

OECD Better Life Index

An alternative measure of well-being considering factors like education, environment, and work-life balance.

Happiness Index

A measure focusing on subjective well-being and life satisfaction.

Happy Planet Index

An evaluation of sustainable well-being and ecological efficiency.

Investor Psychology in Market Cycle

The emotions and behaviors of investors fluctuating from optimism to panic during different economic phases.