Economics Exam Review Flashcards

These flashcards cover key concepts in economics to assist in exam preparation.

Reserve Ratio

The fraction of deposits that a bank must hold as reserves and not lend out.

Money Multiplier

The ratio of the amount of deposits created by banks to the amount of reserves held by the bank.

Federal Reserve

The central bank of the United States that regulates the economy's money supply.

Structurally Unemployed

Workers who lose their jobs due to changes in the economy, creating a mismatch between their skills and available jobs.

Open Market Purchase

An action by the Federal Reserve to buy government securities to increase the money supply.

GDP (Gross Domestic Product)

The total value of all goods and services produced in a country over a specific time period.

CPI (Consumer Price Index)

A measure that examines the weighted average of prices of a basket of consumer goods and services.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Fiscal Policy

The use of government spending and taxation to influence the economy.

Velocity of Money

The rate at which money is exchanged in an economy, reflecting how quickly money is circulating.

Long-run Economic Growth

Sustained increase in an economy's output over time, increasing living standards.

Cyclical Unemployment

Unemployment that results from economic downturns or recessions.

Labor Force Participation Rate

The percentage of the working-age population that is in the labor force.

Deflation

A decrease in the general price level of goods and services.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation).

Aggregate Demand

The total demand for all goods and services in an economy at various price levels.

Discouraged Workers

Individuals who are not actively looking for work because they believe no jobs are available.

Monetary Policy

The process by which a central bank manages money supply to achieve specific goals.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

AD-AS Model

A macroeconomic model that analyzes the aggregate demand and supply to understand economic fluctuations.

Disinflation

A reduction in the rate of inflation - prices are still rising but at a slower rate.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy are willing to produce at a given overall price level.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Natural Unemployment Rate

The level of unemployment consistent with a stable rate of inflation, including frictional and structural unemployment.

Economic Recession

A period of temporary economic decline during which trade and industrial activity are reduced.

Taxation

The process of collecting money from individuals and businesses by the government to fund public services.

Government Expenditure

Total amount spent by the government on goods and services.

Nominal GDP

The measure of a country's economic performance without adjusting for inflation.

Borrower

An individual or entity that takes out a loan with the promise to pay back with interest.

Lender

An individual or institution that provides funds to borrowers with the expectation of being paid back.

Policy Measures

Specific actions that can be taken by the government to influence economic activity.

Recessionary Gap

The difference between actual output and potential output when the economy is underperforming.

Economic Growth Rate

The measure of how fast a country's economy is growing, usually expressed as a percentage.

Price Level

The average level of prices in the economy at a given time.

Money Supply

The total amount of money available in the economy at a specific time.

Aggregate Demand Curve

A graphical representation of the total demand for goods and services at different price levels.

Economic Indicators

Statistics that provide information about the economic performance of a country.

Humanitarian Aid

Material or logistical assistance provided for humanitarian purposes, often in response to humanitarian crises.

Expected Inflation

The rate at which people expect prices to rise in the future.

Open Market Operations

The buying and selling of government securities by the Fed to control the money supply.

Policy Lag

The delay between the recognition of an economic issue and the implementation of a policy response.

Economic Output

The total amount of goods and services produced in an economy.

Market Equilibrium

The point at which supply equals demand for a product or service.

Full Employment

The condition in which all available labor resources are being used in the most efficient way.

Fiscal Stimulus

Increased government spending or tax cuts aimed at boosting economic activity.

Consumer Spending

The total money spent by households in an economy on goods and services.