macro

• incentives


  rewards and penalties that motivate behavior (chapter 01)

  
• scarce


  when there isn't enough of a specific resource to satisfy all of our wants (chapter 01)

  
• great economic problem


  how to arrange our scarce resources to satisfy as many of our wants as possible (chapter 01)

  
• opportunity cost


  the value of the opportunities lost when a choice is made (chapter 01)

  
• inflation


  an increase in the general level of prices (chapter 01)

  
• gross domestic product (GDP)


  the market value of all finished goods and services produced within a country in a year

  
• GDP per capita


  GDP divided by population (chapter 26)

  
• gross national product (GNP)


  the market value of all finished goods and services produced by a country's citizens, wherever located, in a year (chapter 26)

  
• nominal GDP


  gross domestic product not adjusted for changes in prices
• nominal variables


  variables, such as nominal GDP, that have not been adjusted for changes in prices (chapter 26)
• real variables


  variables such as real GDP, that have been adjusted for changes in prices by using the same set of prices in all time periods (chapter 26)
• recession


  a significant, widespread decline in real income and employment (chapter 26)
• business fluctuations (business cycles)


  the short-run movements in real GDP around its long-term trend (chapter 26)
• consumption


  private spending on finished goods and services (chapter 26)
• investment


  the purchase of new capital goods
• government purchases


  spending by all levels of government on finished goods and services not including transfers (chapter 26)
• net exports


  the value of exports minus the value of imports (chapter 26)
• economic growth


  the growth rate of real GDP per capita: g t = (Y t - Y {t-1})/Y {t-1})*100%, where Y t is real per capita GDP in period t (chapter 27)
• physical capital


  the stock of tools including machines, structures, and equipment (chapter 27)
• human capital


  tools of the mind: the productive knowledge and skills that workers acquire through education, training, and experience (chapter 27)
• technological knowledge


  knowledge about how the world works that is used to produce goods and services (chapter 27)
• institutions


  the 'rules of the game' that structure economic incentives (chapter 27)
• free rider


  someone who consumes the benefits of a public good without paying a share of the costs (chapter 27)
• economies of scale


  the advantages of large-scale production that reduce average cost as quantity increases (chapter 27)
• saving


  income that is not spent on consumption goods (chapter 29)
• investment


  the purchase of new capital goods: private spending on tools, plant, and equipment used to produce future output (chapter 29)
• time preference


  the desire to have goods and services sooner rather than later (all else being equal) (chapter 29)
• market for loanable funds


  the market where suppliers of loanable funds (savers) trade with demanders of loanable funds (borrowers), thereby determining the equilibrium interest rate (chapter 29)
• financial intermediary


  institutions such as banks, bond markets, and stock markets that reduce the costs of moving funds from savers to borrowers and investors (chapter 29)
• bond


  a sophisticated IOU that documents who owes how much and when payment must be made (chapter 29)
• collateral


  something of value that helps to secure a loan: if the borrower defaults, ownership of the collateral transfers to the lender (chapter 29)
• crowding out


  the decrease in private consumption and investment that occurs when government borrows more --- also, the decrease in private spending that occurs when government increases spending (chapter 29)
• arbitrage


  the practice of taking advantage of price differences for the same good in different markets by buying low in one market and selling high in another market (chapter 29)
• stock (or share)


  a certificate of ownership in a corporation (chapter 29)
• initial public offering (IPO)


  the first instance of a corporation selling stock to the public in order to raise capital (chapter 29)
• owner's equity


  the value of the asset minus the debt (chapter 29)
• leverage ratio


  the ratio of debt to equity, D/E (chapter 29)
• insolvent bank or institution


  a bank or institution whose liabilities are greater in value than its assets
• unemployed


  adults who do not have a job but who are looking for work (chapter 30)
• unemployment rate


  he percentage of the labor force who are unemployed (chapter 30)