Macro Economics

  1. deadweight loss
    the fall in total surplus that results from a market distorition, such as a tax
  2. world price
    the price of a good that prevails in the world market for that good
  3. tariff
    a tax on goods produced abroad and sold domestically
  4. Microeconomics
    the study of how households and firms make decisions and how they interact in markets
  5. macroeconomics
    the study of economy-wide phenomena including inflation, unemployment, and economic growth.
  6. gross domestic product (GDP)
    The market value of all final goods and services produced within a country in a given period of time.
  7. consumption
    spending by households on goods and services, with the exception of purchases of new housing
  8. investment
    spending on capital equipment, inventories, and structures, including household purchases of new housing
  9. government purchases
    spending on goods and services by local, state, and federal governments.
  10. net exports
    spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).
  11. GDP deflator
    a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 (Nominal GDP/Real GDP) * 100
  12. consumer price index (CPI)
    a measure of the overall cost of teh goods and services bought by a typical consumer
  13. inflation rate
    the percentage change in the price index from the preceding period. inflation rate = (CPIyear2-CPIyear1)/CPIyear1 X 100
  14. Producer price index (PPI)
    a measure of the cost of a basket of goods and services bought by firms.
  15. indexation
    the automatic correction of a dollar amount for the effects of inflation by law or contract.
  16. Nominal interest rate
    the interest rate as usually reported without a correction for the effects of inflation
  17. Real interest rate
    • the interest rate corrected for the effects of inflation.
    • Real interest rate = nominal interest rate - inflation rate
  18. productivity
    the amount of goods and services a worker produces in each hour of work.
  19. Physical capital
    the stock of equipment and structures that are used to produce goods and services.
  20. Human capital
    the knowledge and skills that workers acquire through education, training, and experience.
  21. Natural resources
    the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits
  22. technological knowledge
    society's understanding of the best ways to produce goods and services
  23. diminishing returns
    the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
  24. catch-up effect
    the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
  25. Labor force
    the total number of workers, including both the employed and the unemployed.  Labor force = Number of employed + Number of unemployed.
  26. Unemployment rate
    the percentage of the labor force that is unemployed. Unemployment rate = (Unber of unemployed/labor force) X 100%
  27. Labor-force participation rate
    the percentage of the adult population that is in the labor force.  Labor-force participation rate = (Labor force/Adult population) X 100%
  28. natural rate of unemployment
    the normal rate of unemployment around which the unemployment rate fluctuates.
  29. cyclical unemployment
    the deviation of unemployment from its natural rate
  30. discouraged workers
    individuals who would like to work but have given up looking for a job.
  31. frictional unemployment
    unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.
  32. structural unemployment
    unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one.
  33. job search
    the process by which workers find appropriate jobs given their tastes and skills.
  34. unemployment insurance
    a government program that partially protects workers' incomes when they become unemployed.
  35. union
    a worker association that bargains with employers over wages and working conditions.
  36. collective bargaining
    the process by which unions and firms agree on the terms of employment
  37. strike
    the organized withdrawal of labor from a firm by a union
  38. efficiency wages
    above-equilibrium wages paid by firms in order to increase worker productivity.
Card Set
Macro Economics
Macro Economic test for chapters 8,9,10,11,12,15