ECON 203

  1. Inflation
    a rise in the overall level of prices.
  2. Deflation
    A drop in the overall level of prices.
  3. Price Stability
    A situation in which the overall cost of living is changing slowly or not at all.
  4. Business Cycle
    The short-run alternation between economic downturns, known as recessions, and economic upturns known as expansion.
  5. Long-run Growth
    The sustained rise in the quantity of goods and services the economy produces.
  6. 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.
  7. Self-Regulating Economy
    Economic problems are resolved with out intervention from the government.
  8. Keynesian Economics
    Argues that a depressed economy is due to inadequate spending and government intervention can help a depressed economythrough
  9. Monetary Policy
    uses changes in the quantity of money to alter interest rates and affect overall spending.
  10. Fiscal policy
    uses changes in government spending and taxes to affect overall spending.
  11. Business Cycle
    the short-run alternation between economic downturns and economic upturns.
  12. Depression
    is a very deep and prolonged downturn.
  13. Recession
    periods of economic downturns when output and employment are falling.
  14. Expansion
    sometimes called recoveries, are periods of economic upturns when output and employment are rising.
  15. Business-Cycle Peak
    The point at which the economy turns from expansion to recession
Card Set
ECON 203
ECON 203 Midterm 2