Honors Econ Etikerentse chapters 13-15 (unit 3??) terms

i hate this class

economy

the structure of economic activity in a locality, a region, a country, a group of countries, or the world

gross domestic product

the market value of all final goods and services produced in the nation during a given period, usually a year

consumption

household purchases of final goods and services

investment

the purchase of new plants, new equipment, new buildings, new residences, and net additions to inventories

government purchases

spending on goods and services by all levels of government

net exports

the value of a country’s exports minus the value of its imports

aggregate expenditure

total spending on all final goods and services produced in the economy during the year

aggregate income

the sum of all the income earned by resource suppliers in the economy during the year

depreciation

the value of capital stock that is used up or becomes obsolete in producing GDP during the year

nominal GDP

the economy’s aggregate output based on prices at the time of the transaction; current-dollar GDP

real GDP

the economy’s aggregate output measured in dollars of constant purchasing power; GDP measured in terms of the goods and services produced

consumer price index

measure of inflation based on the cost of a fixed “market basket” of goods and services purchased by a typical family

business cycle

fluctuations reflecting the rise and fall of economic activity relative to the long-term growth trend of the economy

recession

a decline in total production lasting at least two consecutive quarters, or at least six months

expansion

the phase of economic activity during which the economy’s total output increases

leading economic indicators

measures that usually predict, or lead to, recessions or expansions

aggregate output

a composite measure of all final goods and services produced in an economy during a given period; real GDP

aggregate demand

the relationship between the average price of aggregate output and the quantity of aggregate output demanded, with other things constant

price level

a composite measure reflecting the prices of all goods and services in the economy relative to prices in a base year

aggregate demand curve

a curve representing the relationship between the economy’s real price level and real GDP demanded per period, other things constant

aggregate supply curve

a curve representing the relationship between the economy’s price level and real GDP supplied per period, other things constant

standard of living

an economy’s level of prosperity; best measured by the value of goods and services produced, on average, per person

productivity

compared total output to a specific measure of input; usually reflects an average, such as bushels of grain per acre of farmland

labor productivity

output per unit of labor; measured by total output divided by the hours of labor employed to produce that output

human capital

the accumulated knowledge, skill, and experience of the labor force

physical capital

the machines, building, roads, airports, communication networks, and other manufactured creations used to produce goods and services; also called capital goods

capital deepening

an increase in the quantity and quality of capital per worker; one source of rising labor productivity

rules of the game

the formal and informal institutions that provide production incentives and promote economic activity, such as laws, customs, and conventions of the market

industrial market countries

the advanced market economies of Western Europe, North America, Australia, New Zealand and Japan; also called developed countries

developing countries

countries with a lower standard of living because they have relatively less human and physical capital

group of seven

the seven leading industrial market economies, including the United States, United Kingdom, France, Germany, Italy, Japan, and Canada

basic research

the search for knowledge without regard to how that knowledge will be used; a first step toward technological advancement

applied research

research that seeks answers to particular questions or applies scientific discoveries to develop specific products

industrial policy

the view that government-- using taxes, subsidies, and regulations --should nurture the industries and technologies of the future, thereby giving domestic industries an advantage over foreign competition

cluster

firms in the same industry or in related industries that group together in a region

full employment

occurs when there is no cyclical unemployment; relatively low unemployment

underemployment

workers that are overqualified for jobs or work fewer hours than they would prefer

labor force

those in the adult population who are either working or looking for work

unemployment rate

the number of people without jobs who are looking for work divided by the number in the labor force

labor force participation rate

the number in the labor force divided by the adult population

unemployment benefits

cash transfers to unemployment workers who lost their jobs, actively seek work, and meet other qualifications

inflation

an increase in the economy’s price level

demand-pull inflation

Inflation resulting from a rightward shift of the demand curve; greater demand pulls up the price level

cost-push inflation

inflation resulting from a leftward shift of the aggregate supply curve; reduced supply pushes up the price level

nominal interest rate

the interest rate expressed in current dollars as a percentage of the amount loaned; the interest rate on the loan agreement

real interest rate

the interest rate expressed in dollars of constant purchasing power as a percentage of the amount loaned; the nominal interest rate minus the inflation rate

laissez-faire

the doctrine that the government should not intervene in a market economy beyond the minimum required to maintain peace and property rights

demand-side economics

macroeconomic policy that focuses on shifting the aggregate demand curve as a way of promoting full employment and price stability

stagflation

a decline, or stagnation, of a nation’s output accompanied by a rise, or inflation, in the price level

supply-side economics

macroeconomic policy that focuses on a rightward shift of the aggregate supply curve through tax cuts or other changes that increase production incentives

cycle of poverty

children in welfare families may end up on welfare themselves when they grow up

welfare reform

an overhaul of the welfare system in 1996 that imposed a lifetime welfare limit of five years per recipient and other conditions