Macro Econ Final Lecture note terms

the total number of workers, including both the employed and the unemployed.

Labor force = Number of employed + Number of unemployed

the percentage of the labor force that is unemployed

• the precentage of the adult population that is in the labor force.
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the normal rate of unemployment around which the unemployment rate fluctuates.

the deviation of unemployment from its natural rate

individuals who would like to work but have given up looking for a job

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

the process by which workers find appropriate jobs given their tastes and skills

a government program that partially protects workers' incomes when they become unemployed

a worker association that bargains with employers over wages and working conditions

the process by which unions and firms agree on the terms of employment

the organized withdrawal of labor from a firm by a union

above-equilibrium wages paid by firms in order to increase worker productivity

the set of assets in an economy that people regularly use to buy goods and services from other peopl

an item that buyers give to sellers when they want to purchase goods and services

the yardstick people use to post prices and record debts

an item that people can use to transfer purchasing power from the present to the future

the ease with which an asset can be converted into the economy's medium of exchange

money that takes the form of a commodity with intrinsic value

money without intrinsic value that is used as money because of government decree

the paper bills and coins in the hands of the public

balances in bank accounts that depositors can access on demand by writing a check

the central bank of the United States

an institution designed to oversee the banking system and regulate the quantity of money in the economy

the quantity of money available in the economy

the setting of the money supply by policymakers in the central bank

deposits that banks have received but have not loaned out

a banking system in which banks hold only a fraction of deposits as reserves

the fraction of deposits that banks hold as reserves

the amount of money the banking system generates with each dollar of reserves

the resources a bank's owners have put into the institution

the use of borrowed money to supplement existing funds for purposes of investment

the ratio of assets to bank capital

a government regulation specifying a minimum amount of bank capital

the purchase and sale of U.S. government bonds by the Fed

the interest rate on the loans that the Fed makes to banks

regulations on the minimum amounts of reserves that banks must hold against deposits

the short-term interest rate that banks charge one another for loans

a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the infaltion rate

variables measured in monetary units

variables measured in physical units

the theoretical separation of nominal and real variables

the proposition that changes in the money supply do not affect real variables

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• the rate at which money changes hands

the queation , which relates the quantity of money, the velocity of money, and the dollar value of the economy's output of goods and services

the revenue the government raises by creating money

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• the one-for-one adjustment of the nominal interest rate to the inflation rate.

teh resources wasted when infaltion encourages people to reduce their money holdings

the costs of changing prices

an economy that does not interact with other economies in the world

an economy that interacts freely with other economies around the world

goods and services that are produced domestically and sold abroad

goods and services that are produced abroad and sold domestically

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• the value of a nation's exports minus the value of its imports, also called the trade balance

the value of a nation's exports minus the value of its imports, also called net exports

an excess of exports over imports

an excess of imports over exports

a situation in which exports equal imports

the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners

the rate at which a person can trade the currency of one country for the currency of another

an increase in the value of a currency as measured by the amount of foreign currency it can buy

a decrease in the value of a currency as measured by the amount of foreign currency it can buy

the rate at which a person can trade the goods and services of one country for the goods and services of another

a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries

a government policy that directly influences the quantity of goods and services that a country imports or exports

a large and sudden reduction in the demand for assets located in a country

a period of declining real incomes and rising unemployment

a severe recession

the model that most economists use to explain short-run fluctuations in economic activity around its long-run trend

a curve that shows the quantity of goods and services that households, firms, and the government want to buy at each price level

a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level

the production of goods and services that an economy achieves in the long run when employment is at its natural level

a period of falling output and rising prices