Intro to Macro
The system by which a society produces and distributes goods and services
Economy
A table that shows the quantity demanded at different prices
Demand schedule
Annual percentage increase in inflation-adjusted gross domestic product
Real GDP growth (%)
A period of economic decline characterized by a decline in aggregate demand/spending and high unemployment
Recession
The central bank of the United States responsible for monetary policy and financial stability.
Federal Reserve
The act of using goods and services to satisfy needs and wants
Consumption
The point at which quantity demanded equals quantity supplied, resulting in no shortage or surplus
Market equilibrium
Maximum level of real GDP that can be sustained over the long term
Four phases of a business cycle
Trough, Expansion, Peak, Contraction
The actions taken by the central bank to control the money supply, interest rates, and stabilize the economy.
Monetary policy
Different groups in society that participate in economic activities (3 Spheres)
Core, business, and public purpose sphere
The inverse relationship between price and quantity demanded, ceteris paribus
Law of demand
Difference between potential GDP and actual real GDP
Output gap
An organization that dates business cycles in the US and defines recessions
National Bureau of Economic Research (NBER)
Describes the response of output (GDP) to a change in government spending (G)
Multiplier
An economic system where resources are privately owned and allocated through voluntary exchange
Free-market capitalism
A situation in which quantity supplied exceeds quantity demanded at a given price
Surplus
Three critiques of GDP as a measure of well-being
Distributional, feminist, environmental
States that a 3% fall in real GDP growth leads to a 1% rise in the unemployment rate
Okun's law
An expansionary fiscal policy approach aimed at increasing government spending and reducing taxes to stimulate economic growth
Stimulus
An economic system where resources are owned collectively and allocated through market mechanisms
Market socialism
A graphical representation of the relationship between price and quantity supplied for all firms in the market
Market supply curve
Measure of income inequality from 0 (perfect equality) to 1 (complete inequality)
Gini coefficient
Spending that falls in a recession and rises in an expansion, e.g., consumption, investment, and education spending
Procyclical spending
A graphical representation we use to explore the maximum possibilities for what an economy can produce
Production Possibilities Frontier (PPF)