Macroeconomics
Money neutrality: The idea that a change in money supply only affects nominal values. Money supply (Ms): The relationship between thequantitysuppliedofmoneyandtheinterest rate in the money market. Since the central bank controls it, the money supply curve is constant and vertical. Multiplier: Theratioofthechangeinoutputtoa change in some autonomous variable. Nationaldebt: Theamountofmoneyowedbya government to its creditors as a result of accumulated budget defcits. Nationalincomeaccounting: Measuresoftotal output of an economy. National savings (S): The sum of private and public savings that makes up the source of loanable funds. Natural rate of unemployment (NRU): The unemployment rate at whichtheexpectedand actual inflation rates are equalwithnocyclical unemployment. At this levelofunemployment, the economy achieves potential output. Negative demand shock: A signifcant unexpecteddecreaseinaggregatedemandthat shifts the AD curve to the left. Negative supply shock: A signifcant unexpected decrease in aggregate supply that shifts the AS curve to the right. Net capital inflow (NCI): The difference between a country’scapitalinflowsandcapital outflows. Net exports (X − M): The difference between the value of exports and the value of imports. Networth: Thedifferencebetweentotalassets and total liabilities on a balance sheet; also known as owners’ equity.
Nominal values: Measurementsofvariablesat current or actual market prices. Normalgood: Agoodwhosedemandincreases with a rise in consumers’ incomes. Normative statements: Economic statements based on opinions and value judgments that cannot be proven. Not in the labor force: People excluded from the labor force because they arenotseekinga job or gave up looking for one. Open economy: An economic model that assumesthatacountryengagesininternational trade, and therefore, records imports and exports. Openmarketoperations(OMOs): Thesaleand purchase offnancialsecurities,suchasbonds, by the central banktochangemoneysupplyin an economy. Opportunity cost: The next best alternative foregone or sacrifced when a decision is made. Output gaps: The difference between an economy’s fullemploymentlevelanditsactual output level. Peak/boom: Thehighestpointonthebusiness cycle where real GDP and employment are at their highest levels. Phillips curvemodel: Aneconomicmodelthat illustrates the relationship between inflation and unemployment in the short and the long run. Policy mix: A mix of fscal and monetary policies used to achieve macroeconomic objectives and restore equilibrium in an economy.
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