Macro Econ Final Lecture note terms

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Macro Econ Final Lecture note terms
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2012-12-12 20:43:54
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Macro Econ Final Lecture note terms
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Terms from lecture notes
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  1. Labor Force
    the total number of workers, including both the employed and the unemployed.

    Labor force = Number of employed + Number of unemployed
  2. unemployment rate
    the percentage of the labor force that is unemployed

  3. labor-force participation rate
    • the precentage of the adult population that is in the labor force.
  4. natural rate of unemployment
    the normal rate of unemployment around which the unemployment rate fluctuates.
  5. cyclical unemployment
    the deviation of unemployment from its natural rate
  6. discouraged workers
    individuals who would like to work but have given up looking for a job
  7. frictional unemployment
    unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
  8. structural unemployment
    unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
  9. job search
    the process by which workers find appropriate jobs given their tastes and skills
  10. unemployment insurance
    a government program that partially protects workers' incomes when they become unemployed
  11. union
    a worker association that bargains with employers over wages and working conditions
  12. collective bargaining
    the process by which unions and firms agree on the terms of employment
  13. strike
    the organized withdrawal of labor from a firm by a union
  14. efficiency wages
    above-equilibrium wages paid by firms in order to increase worker productivity
  15. money
    the set of assets in an economy that people regularly use to buy goods and services from other peopl
  16. medium of exchange
    an item that buyers give to sellers when they want to purchase goods and services
  17. unit of account
    the yardstick people use to post prices and record debts
  18. store of value
    an item that people can use to transfer purchasing power from the present to the future
  19. liquidity
    the ease with which an asset can be converted into the economy's medium of exchange
  20. commodity money
    money that takes the form of a commodity with intrinsic value
  21. fiat money
    money without intrinsic value that is used as money because of government decree
  22. currency
    the paper bills and coins in the hands of the public
  23. demand deposits
    balances in bank accounts that depositors can access on demand by writing a check
  24. Federal reserve (Fed)
    the central bank of the United States
  25. central bank
    an institution designed to oversee the banking system and regulate the quantity of money in the economy
  26. money supply
    the quantity of money available in the economy
  27. monetary policy
    the setting of the money supply by policymakers in the central bank
  28. reserves
    deposits that banks have received but have not loaned out
  29. fractional-reserve banking
    a banking system in which banks hold only a fraction of deposits as reserves
  30. reserve ratio
    the fraction of deposits that banks hold as reserves
  31. money multiplier
    the amount of money the banking system generates with each dollar of reserves
  32. bank capital
    the resources a bank's owners have put into the institution
  33. leverage
    the use of borrowed money to supplement existing funds for purposes of investment
  34. leverage ratio
    the ratio of assets to bank capital
  35. capital requirement
    a government regulation specifying a minimum amount of bank capital
  36. open market operations
    the purchase and sale of U.S. government bonds by the Fed
  37. discount rate
    the interest rate on the loans that the Fed makes to banks
  38. reserve requirements
    regulations on the minimum amounts of reserves that banks must hold against deposits
  39. federal funds rate
    the short-term interest rate that banks charge one another for loans
  40. quantity theory of money
    a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the infaltion rate
  41. nominal variables
    variables measured in monetary units
  42. real variables
    variables measured in physical units
  43. classical dichotomy
    the theoretical separation of nominal and real variables
  44. monetary neutrality
    the proposition that changes in the money supply do not affect real variables
  45. velocity of money
    • the rate at which money changes hands
  46. quantity equation
    the queation , which relates the quantity of money, the velocity of money, and the dollar value of the economy's output of goods and services
  47. inflation tax
    the revenue the government raises by creating money
  48. the Fisher Effect
    • the one-for-one adjustment of the nominal interest rate to the inflation rate.
  49. shoeleather costs
    teh resources wasted when infaltion encourages people to reduce their money holdings
  50. menu costs
    the costs of changing prices
  51. closed economy
    an economy that does not interact with other economies in the world
  52. open economy
    an economy that interacts freely with other economies around the world
  53. exports
    goods and services that are produced domestically and sold abroad
  54. imports
    goods and services that are produced abroad and sold domestically
  55. net exports
    • the value of a nation's exports minus the value of its imports, also called the trade balance
  56. trade balance
    the value of a nation's exports minus the value of its imports, also called net exports
  57. trade surplus
    an excess of exports over imports
  58. trade deficit
    an excess of imports over exports
  59. balanced trade
    a situation in which exports equal imports
  60. net capital outflow (NCO)
    the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners
  61. nominal exchange rate
    the rate at which a person can trade the currency of one country for the currency of another
  62. appreciation
    an increase in the value of a currency as measured by the amount of foreign currency it can buy
  63. depreciation
    a decrease in the value of a currency as measured by the amount of foreign currency it can buy
  64. real exchange rate
    the rate at which a person can trade the goods and services of one country for the goods and services of another
  65. purchasing-power parity
    a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries
  66. trade policy
    a government policy that directly influences the quantity of goods and services that a country imports or exports
  67. capital flight
    a large and sudden reduction in the demand for assets located in a country
  68. recession
    a period of declining real incomes and rising unemployment
  69. depression
    a severe recession
  70. model of aggregate demand and aggregate supply
    the model that most economists use to explain short-run fluctuations in economic activity around its long-run trend
  71. aggregate-demand curve
    a curve that shows the quantity of goods and services that households, firms, and the government want to buy at each price level
  72. aggregate-supply curve
    a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level
  73. natural rate of output
    the production of goods and services that an economy achieves in the long run when employment is at its natural level
  74. stagflation
    a period of falling output and rising prices

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