Macroeconomics

National Income: The value of all goods and services produced in a country within a certain time period.
The Output Method: Measures national income by calculating the value of all finished goods and services produced in the country's economy in a year.
The Income Method: Measures the national income by calculating the sum of wages, rent, interest, and profits in a year.
The Expenditure Method: Measures the national income by calculating the total amount of expenditure in the economy in a year.
Gross Domestic Product: The value of a country's output of finished goods and services in a year.
Gross National Income: The value of a country's output of finished goods and services in a year, plus incomes from abroad.
Real GDP/GNI: [GDP/GNI], adjusted for inflation by using constant prices.
Real GDP/GNI Per Capita at Purchasing Power Parity: [Real GDP/GNI], adjusted for the cost of living in countries.
Business Cycle: A model that describes both the short and long term trends in economic activity over time.
OECD Better Life Index/Happiness Index/Happy Planet Index: An alternative to national income as a measure of wellbeing.

Aggregate Demand: The total value of all goods and services consumers are willing and able to purchase in an economy per year.
Aggregate Supply: The total value of all goods and services producers are willing and able to sell in an economy per year.
Inflationary Gap: Exists when an economy's real GDP exceeds its potential long-run full employment output.
Deflationary Gap: Exists when an economy's real GDP is below its potential long-run full employment output.
Full Employment: Exists when an economy is at its natural rate of unemployment, and the economy is operating at its full capacity.
Natural Rate of Unemployment: The level of employment at when the economy is operating at full employment, consisting of seasonal, frictional, and structural unemployment.

Economic Growth

Macroeconomic Objectives - Low Unemployment

Unemployment: The issue when people willing and able to work are unable to find jobs.
Labor Force: All people of working age who are either employed or willing and able to work.
Hidden Unemployment: People who classify as unemployed but are not included in official unemployment records.
Underemployment: The issue when people in the labor force are unable to find enough work.
Cyclical Unemployment: Unemployment caused by a lack of demand for goods and services.
Structural Unemployment: Unemployment caused by technical mismatches between worker abilities and job requirements.
Seasonal Unemployment: Unemployment caused by periodical changes in the demand for labor during the year.
Frictional Unemployment: Unemployment caused by temporarily jobless people actively searching for new jobs.
Natural Rate of Unemployment: The level of employment at when the economy is operating at full employment, consisting of seasonal, frictional, and structural unemployment.

Low and Stable Rate of Inflation

Inflation: A sustained rise in the general price level of an economy over time.
Deflation: A sustained decrease in the general price level of an economy over time.
Disinflation: A fall in the rate of inflation.
Consumer Price Index: A weighted average of prices of typical household goods and services.
Cost-Push Inflation: Inflation caused by higher costs of production, which decreases aggregate supply, increasing the general price level.
Demand-Pull Inflation: Inflation caused by higher aggregate demand for goods and services, increasing the general price level.

Sustainable Level of Government Debt

Government/National Debt: The sum of all debt accumulated and owed by the government.
Debt Servicing Costs: The expenses of the government repaying the accumulated debt.
Credit Rating: A measure of a borrower's ability to repay loans.

Potential Conflicts Between Macroeconomic Objectives

Inequality and Poverty

Equity: Refers to economic fairness, where people working harder will earn higher salaries.
Income Inequality: The issue of income being unequally distributed in an economy.
Wealth Inequality: The issue of assets being unequally distributed in an economy.
Gini Coefficient: A measure of either wealth or income inequality in an economy, with values ranging from 0 to 1.
Absoulute Poverty: Deprivation of basic human needs such as food, shelter, and sanitation.
Relative Poverty: The issue of households being unable to afford the standard of living in an economy.
Human Capital: The valued accumulation of skill knowledge, and experience of the labor force.

Taxes

Progressive Taxes: Taxes that charge an increasing percentage as incomes increase.
Proportional Taxes: Taxes that charge a constant percentage at every income level.
Regressive Taxes: Taxes that charge a decreasing percentage as incomes increase.
Marginal Tax Rate: The tax percentage paid on the last dollar of an income.
Direct Taxes: Taxes imposed on income, rather than expenditure.
Indirect Taxes: Taxes imposed on expenditure, rather than income.

Monetary Policy: The use of interest rates and the money supply to influence the level of economic activity and order to achieve macroeconomic objectives.
Interest Rates: The cost of borrowing money.
Real Interest Rate: The cost of borrowing money, adjusted for current inflation.
Money Supply: The total amount of money circulating in an economy.
Money Creation: The process in which commercial banks create credit from deposits and loans.
Open Market Operations: The buying and selling of government bonds by the central bank.
Minimum Reserve Requirements: The lowest amount of customer deposits commercial banks are obliged to keep in the bank.
Minimum Lending Rate: The interest rate charged by the central bank when commercial banks borrow from it.
Quantitative Easing: The buying and selling of corporate bonds by the central bank, thereby injecting money into the economy.
Money Demand: The demand of households and firms to hold money for current spending, rather than saving, in the economy.
Money Supply: The supply of circulating money in the economy.

Fiscal Policy: The use of taxation and government expenditure policies to influence the level of economic activity and achieve macroeconomic objectives.
Current Expenditure: Government expenditure on goods and services within the current fiscal year.
Capital Expenditure: Government expenditure on long-term projects.
Transfer Payments: A sum of money from the government to households or firms with no goods or services exchanged in the return.
Keynesian Multiplier: A calculation that shows an increase in injections in the economy results in a proportionately greater effect on aggregate demand.
Crowding Out: An effect where increased government borrowing (as a result of fiscal policy) causes commercial bank interest rates to rise, reducing household consumption and capital investment.
Automatic Stabilizers: Fiscal policy measures that reduce fluctuations in economic activity, stabilizing the growth.

Supply-Side Policies: Long-term government strategies used to increase the quality and quantity of factors of production to influence the productive capacity of the economy.