BAC102

• Supply Schedule 


  table showing the quantity supplied of some product
• Supply Curve 


  graphical depiction of a supply schedule
• increase in supply quantity 


  outward or right movement
• decrease in supply quantity

  inward or left movement
• Law of Supply and Demand 


  forces of supply and demand generally push a price toward the level at which quantity is supplied and quantity demanded are EQUAL
• Macroeconomics 


  concentrates on the behavior of the entire/ whole economies no matter how small
• Macro-economists 


  study of overall price level, unemployment rate and other things that we call economic aggregates
• Aggregation 


  combining many individual markets into one overall market (abstraction called total domestic product)
• Aggregate Demand Curve 


  quantity of domestic product that is demanded in each possible value of the price level (DD)
• Aggregate Supply Curve 


  the quantity of goods and services that all nation's businesses are willing to produce during a specified period of time, holding other determinants aggregate quantity supplied constant
• Inflation 


  a sustained increase in the general price level
• Recession 


  period of time during which the total output of the economy declines
• Gross Domestic Product (GDP) 


  sum of the money values of all final goods and services produced in the domestic economy and sold and organized market during a specified period of time, usually a year (way to measure an economy's total output)
• Nominal GDP

  • calculated by valuing all outputs at current prices
  • perfect for inflation
  • increases when price rise, even if there is no increase in actual production
• Real GDP

  • calculated by valuing outputs of different years at common prices
  • better measure than nominal GDP
  • GDP corrected for inflation
  • recession as a period in which real GDP declines
• Final Goods and Services 


  those that are purchased by their ultimate users. (final products)
• Intermediate Goods 


  good purchased for resale and for use in producing another good
• Counted in the GDP

  final goods and services
• Limitation of the GDP:

  • only the market activity is recorded in the GDP
  • no value on leisure
• Underground Economy 


  includes not just criminal activities but also a great deal of legitimate businesses that is conducted by cash or barter to escape the tax collector
• Real GDP per Capita


  the ratio of the real GDP divided by the population (real GDP/population)
• Deflation 


  sustained decrease in the general price level
• Great Depression 


  decline in economic activity in 1929 to 1933
• Fiscal Policy 


  (govt.) plan for spending and taxation can be used to steer aggregate demand in the desired direction (control)
• John Maynard Keynes 


  The General Theory
• Stagflation 


  inflation that occurs while the economy is growing slowly ("stagnating") or in a recession (stagnant)
• Monetary Policy 


  actions taken by the Federal Reserve to influence the aggregate demand mainly by changing interest rates
• Stabilization Policy 


  name given to govt. programs designed to prevent or shorten recessions and to counteract inflation (to stabilize prices)
• 2nd principal issue of macroeconomics

  • by shifting the demand curve in the opposite direction
  • leftward shift of the aggregate demand curve means a recession
  • total output declines
• 3rd major concern in macroeconomics

  • process of economic growth
  • shift to the right over time
• Price floors 


  legal minimum below which prices charged for a commodity are not permitted to fall
• Shortage 


  excess of quantity demanded over quantity supplied. buyers cannot purchase the quantities they desire at the current price.
• Surplus 


  excess of quantity supplied over quantity demanded. sellers cannot sell the quantities they desire to supply at the current price.
• Equilibrium 


  a situation in which there are no inherent forces that produce change.
• "Outside events" 


  changes away from an equilibrium position as a result of "outside events" that disturb the status quo
• Price Ceilings 


  maximum that the prices charged for a commodity cannot legally exceed.