AP Macroeconomics > Unit 3: Macroeconomic Variables > Flashcards

Unit 3: Macroeconomic Variables Flashcards

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1
Q

Business Sector Definition

A

A part of a nation’s economy composed of the people who rent or buy factors of production and use them to create goods and services.

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2
Q

Consumption Definition

A

Expenditures by the household sector on goods and services for a period of one year; abbreviated C.

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3
Q

Depreciation Definition

A

The value of the capital that wears out over the course of a year.

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4
Q

Double Counting Definition

A

An inclusion of the value of an intermediate good or service in the calculation of GDP.

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5
Q

Durable Good Definition

A

A good used up at a slow rate when it is consumed.

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6
Q

Expenditure Definition

A

The amount of money used to buy goods or services within a period of time.

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7
Q

Exports Definition

A

Expenditures by the foreign sector on domestic goods and services for a period of one year; abbreviated X.

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8
Q

Final Good Definition

A

A good being sold for the last time.

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9
Q

Financial Intermediary Definition

A

A firm that brings together people who have money to loan with people who want to borrow money.

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10
Q

Financial Market Definition

A

A market in which financial intermediaries enable borrowers and lenders to trade savings and interest income.

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11
Q

Flow Variable Definition

A

A variable whose value is determined over a period of time.

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12
Q

Government Expenditures on Goods and Services Definition

A

Expenditures by the government sector on goods and services for a period of one year; abbreviated G.

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13
Q

Government Sector Definition

A

A part of a nation’s economy composed of the local, state, and federal governments.

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14
Q

Gross Domestic Product Definition

A

The total value of all final goods and services produced within a nation’s borders in one year.

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15
Q

Gross National Product Definition

A

The total value of all final goods and services produced by all of the members of a nation in one year.

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16
Q

Household Sector Definition

A

A part of a nation’s economy composed of the people who own factors of production; this group rents or sells the factors to the business sector and buys the goods and services produced by that sector.

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17
Q

Imports Definition

A

Expenditures by the household, business, and government sectors on goods and services made by the foreign sector for a period of one year; abbreviated M.

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18
Q

Income Definition

A

Money earned by the owners of the factors of production.

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19
Q

Injections Definition

A

An expenditure by the business, government, or foreign sectors on domestic goods or services, including investment, government purchases, and exports.

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20
Q

Interest Definition

A

A payment a borrower makes to a lender in exchange for the use of the lender’s funds.

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21
Q

Intermediate Good Definition

A

A good used up in making and selling another good or service; it is produced by a firm and sold to another firm.

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22
Q

Investment Definition

A

Expenditures by the business sector on capital goods for a period of one year; abbreviated I.

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23
Q

Leakages Definition

A

Uses of household income on things other than consumption; income saved, spent on imports, and paid in taxes.

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24
Q

Net Domestic Product Definition

A

GDP minus depreciation.

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25
Net Exports Definition
Exports minus imports; abbreviated NX.
26
Non-durable Goods Definition
A good used up at a fast rate when it is consumed.
27
Real Gross Domestic Product Definition
A calculation of GDP using chaining, so that changes in RGDP only reflect changes in production.
28
Rest of the World Sector Definition
A group of people who participate in a nation's economy, but who aren't a part of that nation.
29
Stock Variable Definition
A variable whose value is determined at a point in time.
30
Transfer Payments Definition
Money or services given by the government to households or businesses; they are not given in exchange for a good or service.
31
Business Cycle Definition
A pattern over time in which increases in RGDP are followed by decreases in RGDP, and decreases are followed by increases.
32
Contraction Definition
The period of time over which RGDP goes from a peak to a trough.
33
Cyclical Unemployment Definition
Unemployment caused by fluctuations in production associated with the business cycle.
34
Discouraged Worker Definition
A person who has given up looking for a job after trying to get one. A discouraged worker is not counted as a member of the labor force.
35
Expansion Definition
The period of time over which RGDP goes from a trough to a peak.
36
Frictional Unemployment Definition
Unemployment caused by people moving between jobs.
37
GDP Gap Definition
The difference between the actual RGDP and the potential RGDP.
38
Index of Leading Indicators Definition
A number that represents a collection of certain economic variables; the index is meant to predict future changes in RGDP.
39
Labor Force Definition
The members of a nation who are actively looking for work and are not retired, under sixteen years old, suffering from mental or physical problems that prevent them from being employed, in jail, or in the military.
40
Peak Definition
A point in time at which RGDP is at a relative maximum.
41
Potential RGDP Definition
The level of RGDP that occurs at full employment.
42
Seasonal Unemployment
Unemployment caused by fluctuations in production due to changes in the time of year.
43
Structural Unemployment Definition
Unemployment caused by factors affecting the structure of the economy, such as the types of goods and services produced, the types of education workers have, government subsidies, and laws that regulate economic activities.
44
Trough Definition
A point in time at which RGDP is at a relative minimum.
45
Unemployment Rate Definition
The percentage of the workforce currently unemployed and actively looking for employment.
46
Base Year Definition
The year in which the composition of the market basket is set for the CPI.
47
Bond Definition
A contract issued by a borrower that allows the holder to receive interest payments as well as the repayment of the savings the borrower originally received.
48
Capital Goods Definition
Machinery, buildings, and so on; these are produced goods that are used to make other goods and services and that are not used up when making the other good or service.
49
Certificate of Deposit (CD) Definition
A financial instrument similar to a bond; it is issued by a bank and is guaranteed by the FDIC.
50
Chaining Definition
A method of calculating RGDP by using the average growth rates of output between successive years.
51
Consumer Price Index (CPI) Definition
A price index created by using a market basket. The CPI is intended to show the cost of the purchases of an "average" household. The CPI measures the price level.
52
Cost-push Inflation
Inflation caused by general decreases in businesses' supply of goods and services.
53
Deflation Definition
A decrease in price level over time, in which many or all prices decrease.
54
Demand-pull Inflation Definition
Inflation caused by general increases in consumers' demand for goods and services.
55
Disinflation Definition
A situation in which prices are increasing at a slower rate.
56
Federal Funds Rate Definition
The interest rate banks charge each other on overnight loans.
57
Financial Instrument Definition
A tool that uses a person's savings to earn interest.
58
Inflation Rate Definition
The percent change in the price level from one year to the next.
59
Interest Rate Definition
The interest payments made on a loan, expressed as a percentage of the amount of the loan.
60
Investment Demand Definition
An inverse relationship that shows the amount of capital goods businesses are willing and able to purchase at various interest rates.
61
Investment Demand Curve Definition
A graphical representation of investment demand.
62
Market Basket Definition
A list of the typical goods and services an urban household buys in one year, used in the calculation of the CPI.
63
Menu Costs Definition
Costs that businesses incur to update their pricing information when there's a price increase.
64
Money Market Mutual Fund Definition
A mutual fund that invests in relatively safe investments, such as short-term bonds.
65
Mortgage Rate Definition
The interest rate financial intermediaries charge on home loans.
66
Mutual Fund Definition
A financial instrument that combines the savings of a group of people and invests the savings into other financial instruments.
67
Nominal Interest Rate Definition
The interest rate that includes a component representing inflation.
68
Nominal Variable Definition
A variable that includes a component showing inflation.
69
Positive Rate of Time Preference Definition
An expression of the fact that people prefer to receive money today, rather than waiting until tomorrow to receive it.
70
Price Index Definition
A number used to measure general price trends in an economy. This number is based on the prices of a selection of goods and services.
71
Prime Rate Definition
The interest rate banks charge their very best customers.
72
Prodcuer Price Index Definition
A price index created by using the prices of production goods.
73
Real Interest Rate Definition
The interest rate that does not include a component representing inflation; the real interest rate equals the nominal interest rate minus the rate of inflation.
74
Real Variable Definition
A variable that does not include a component showing inflation.
75
Stock Definition
A share of ownership in a company.
76
Substitution Bias Definition
A condition that leads to the CPI overstating the price level. Price increases cause consumers to substitute lower priced items for higher priced ones. However, the fixed market basket results in the CPI showing an inaccurate increase in spending.
77
T-bond Definition
A bond issued by the U.S. Treasury Department.
78
U.S. Treasury Department Definition
A part of the executive branch of the federal government that acts like a bank for the federal government by collecting its tax revenues, handling its payments, and obtaining loans for it.
AP Macroeconomics
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