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Business Cycle

The ups and downs of the economy over time — includes expansion, peak, recession, and trough.

Recession vs. Depression

A recession is a short-term drop in the economy; a depression is a longer and more serious one.

Economic Indicators

Leading, coincident, and lagging — they show changes before, during, and after economic trends

CPI (Consumer Price Index

Measures inflation by tracking price changes of goods and services people buy.

Gross Domestic Product (GDP)

The total value of all goods and services made within a country in a year.

Labor Unions

Groups of workers that join together to protect their rights and improve pay, hours, and working conditions.

National Debt

The total amount of money the government owes to lenders.

Absolute vs. Comparative Advantage

Absolute Advantage: When a country can make more of a good using the same resources.

Comparative Advantage: When a country can make a good at a lower opportunity c

Other Government Economic Actions

Embargo:

A ban on trade with another country.

Tariff:

A tax on imported goods to make them more expensive.

Taxes:

Money people and businesses must pay to the government.

Subsidies:

Government payments to help lower the cost of producing certain goods or services.

Balance of trade

The difference between a country’s exports and imports.

I’m ports and exports

Imports: Goods brought into a country from other nations.

Exports: Goods sent out to other countries for sale.

Keynesian Economics

Focuses on aggregate demand and the role of government intervention to stabilize the economy.

Supply-side Economics

Emphasizes aggregate supply and policies to promote production and economic growth

The Federal Reserve

The central bank of the United States, responsible for monetary policy.

Tight Money Policy

Aims to reduce inflation by raising interest rates and restricting credit.

Loose Money Policy

Seeks to stimulate economic growth by lowering interest rates and increasing the availability of credit.

Monetary Policy

Actions taken by the Federal Reserve to manipulate the money supply and credit conditions to influence economic activity.

Interest Rates

The cost of borrowing money.

Reserve Requirement

The percentage of deposits that banks are required to hold in reserve.

Inflation

The general increase in prices of goods and services across an entire economy over a period of time.

Purchasing Power

The value of a unit of currency in terms of the quantity of goods and services it can buy. It represents the buying power of money.

Fiscal Policy

The use of government spending and taxation to influence a country's economy.