Measuring the economy
What is the total value of goods and services produced within a country's borders?
Gross domestic product
What are the four components of Aggregate Demand?
C, I, G, X-M
What is the general term for a sustained increase in a country's real GDP?
Economic growth
What type of poverty refers to a lack of basic necessities for survival?
Absolute poverty
What type of policy involves government spending and taxation decisions?
Fiscal
What does "real" GDP adjust for?
Inflation
What happens to Aggregate Demand if consumer confidence increases?
Shifts right
What is the target inflation rate for most developed economies?
2%
What curve graphically represents income inequality?
Lorenz curve
What institution primarily conducts monetary policy?
Central Bank
What flow model illustrates the interactions between households, firms, government, and the foreign sector?
Circular flow model
What effect does a decrease in wages have on Short-Run Aggregate Supply?
Shifts right
What is the term for unemployment caused by a mismatch between worker skills and available jobs?
Structural employment
What is the numerical measure derived from the Lorenz curve that quantifies income inequality?
Gini Coefficient
What is the typical goal of expansionary fiscal policy during a recession?
Increase AD
Which phase of the business cycle is characterized by declining GDP and rising unemployment?
Contraction (or recession)
What specific economic school of thought believes LRAS is always vertical at full employment?
Neo classical
What type of inflation is caused by increases in the costs of production?
Cost-push inflation
What term describes poverty in relation to the average income level of a society?
Relative poverty
What monetary policy tool involves buying or selling government bonds to influence the money supply?
Open Market Operations
What concept adjusts GDP to reflect the purchasing power of different currencies?
Purchasing power parity
According to Keynesians, what determines the level of output when the economy is in a recessionary gap?
What term describes a period of high inflation combined with high unemployment and stagnant demand?
Stagflation
What type of taxation is designed to reduce income inequality by taxing higher incomes at a greater rate?
Progressive
What is the term for the time between when a policy is implemented and when its effects are felt?