Econ ch 5

  1. Business Cycle
    Recurring periods of growth and decline (or expansion and contraction) in an economy's real output or real GDP
  2. Recovery, Peak, Recession, Trough
    The phases of the business cycle during which real GDP or output increases, reaches its maximum, falls and reaches its minimum, respectively
  3. Total or Aggregate Spending
    The total combined spending of all units in the economy (households plush businesses plus government plus foreign) for the new goods and services.
  4. Personal Consumption Expenditures
    Household spending on new goods and services.
  5. Income-Determined Spending
    Household spending on new goods and services that comes from income earned from providing resources to producers.
  6. Transfer Payment
    Money from the governmnet for which no direct work is performed in returned.
  7. Nonincome-Determined Spending
    Spending that is generated from sources other than household earned income.
  8. Injections into the Spending System
    Spending that comes from a source other than household earned income; nonincome-determined spending.
  9. Financial Institutions
    Organizations such as banks, credit unions, and insurance companies that provide a means for channeling saving into borrowing
  10. Leakages from the Spending Stream
    Uses for earned income other than spending, such as paying taxes and saving.
  11. Investment Spending
    Business spending on new goods, such as machinery, equipment, buildings, and inventories; nonincome-determined spending.
  12. Retained Earnings
    The portion of a buisness' accumulated profits that has been retained for investment or other purposes.
  13. Saving-Borrowing Relationship
    The relationship between the amount saved by households and businesses and the amount returned to the spending stream through business and household borrowing.
  14. Government Purchases of Goods and Services
    Government spending on new goods and services; nonincome-determined spending.
  15. Exports
    Goods and services that are sold abroad
  16. Imports
    Goods and services purchased from abroad.
  17. Net Exports
    Exports minus imports; is positive when exports exceed imports and negative when exports exceed exports.
  18. Multiplier Effect
    The change in total output and income generated by a change in nonincome-determined spending is larger than, or a multiple of, the spending change itself.
  19. Expectations
    Anticipations of future events; can affect current actions by households and businesses and the likelihood that the future events will occur.
  20. Fiscal Policy
    Influencing the levels of aggregate output and employment or prices through changes in federal government purchases, transfer payments and/or taxes.
  21. Monetary Policy
    Influencing the levels of aggregate output and employment or prices through changes in interest rates and the money supply.
Card Set
Econ ch 5
chapter 5 vocab