Economic macroeconomic definitions

Macroeconomics,[object Object],Semester 2 ,[object Object]

C = all household consumption on durables, non-durables and services,[object Object],I = firm’s replacement investment(spending on capital to maintain productivity) or induced investment to increase production,[object Object],G = all government spending ,[object Object],X-M = spending by foreigners on exports less domestic spending on imports ,[object Object]

Business Cycle,[object Object],Peak,[object Object],Trough,[object Object],Expansion,[object Object],Peak,[object Object],Real GDP,[object Object],Trough,[object Object],Potential GDP,[object Object]

Recession ,[object Object],A recession is when the economy experiences two consecutive quarters of falling GDP.,[object Object]

Government Spending + Taxation,[object Object]

Macroeconomic Goals,[object Object],Growth,[object Object],Income Distribution,[object Object],Employment,[object Object],External Stability,[object Object],Price Stability,[object Object]

Inflation,[object Object],Is a sustained increase in the general level of prices and a fall in the value of money,[object Object],LRAS,[object Object],AS,[object Object],AD,[object Object]

Deflation ,[object Object],Is a persistent fall in the average level of prices in an economy. ,[object Object]

Demand Pull inflation,[object Object],Is inflation that is caused by increasing AD in an economy,[object Object],That shifts the AD curve to the right,[object Object],AS,[object Object],AD2,[object Object],AD1,[object Object]

Cost Push inflation,[object Object],Is the inflation that is caused by a increase in,[object Object],The cost of production in the economy,[object Object],That shifts the SRAS curve to the left.,[object Object],AS2,[object Object],AS1,[object Object],AD,[object Object]

Unemployment,[object Object],Is a situation that exists when people who are willing and able to work cannot get a job,[object Object]

Full employment,[object Object],Exists when the number of jobs available in an economy is equal to or greater than the number of people actively seeking work,[object Object]

Underemployment,[object Object],When workers are carrying out jobs for which they are over qualified, that is they are not using their full skills and abilities or when workers are employed part time, even though they are available for full time employment, or when workers in a planned economy are undertaking jobs that would not exist in a free market,[object Object]

Demand deficient,[object Object],Or,[object Object],Cyclical unemployment,[object Object],Is unemployment that exists when there is insufficient AD in the economy and real wages,[object Object],Do not fall to compensate for this,[object Object]

Direct taxation,[object Object],Is taxation imposed on people’s income or wealth, and on firms profit.,[object Object]

Indirect Taxation,[object Object],Is tax on expenditure. IT is added to the selling price of a good or service,[object Object]

Economic macroeconomic definitions

Economic macroeconomic definitions

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Economic macroeconomic definitions