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ECON 203
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Inflation
a rise in the overall level of prices.
Deflation
A drop in the overall level of prices.
Price Stability
A situation in which the overall cost of living is changing slowly or not at all.
Business Cycle
The short-run alternation between economic downturns, known as recessions, and economic upturns known as expansion.
Long-run Growth
The sustained rise in the quantity of goods and services the economy produces.
Paradox of Thrift
when families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending.
This reduction in spending depresses the economy as consumers spend less and businesses react by laying off workers.
As a result, families and businesses may end up worse off than if they hadn’t tried to act responsibly by cutting their spending.
Self-Regulating Economy
Economic problems are resolved with out intervention from the government.
Keynesian Economics
Argues that a depressed economy is due to inadequate spending and government intervention can help a depressed economythrough
Monetary Policy
uses changes in the quantity of money to alter interest rates and affect overall spending.
Fiscal policy
uses changes in government spending and taxes to affect overall spending.
Business Cycle
the short-run alternation between economic downturns and economic upturns.
Depression
is a very deep and prolonged downturn.
Recession
periods of economic downturns when output and employment are falling.
Expansion
sometimes called recoveries, are periods of economic upturns when output and employment are rising.
Business-Cycle Peak
The point at which the economy turns from expansion to recession
Author
elli8456
ID
12245
Card Set
ECON 203
Description
ECON 203 Midterm 2
Updated
2010-03-31T14:49:29Z
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