Macroeconomics

‭Positive‬ ‭demand‬ ‭shock:‬ ‭A‬ ‭signifcant‬ ‭unexpected‬ ‭increase‬ ‭in‬‭aggregate‬‭demand‬‭that‬ ‭shifts the AD curve to the right.‬ ‭Positive‬ ‭statements:‬ ‭Economic‬ ‭statements‬ ‭based on facts and actual evidence.‬ ‭Positive‬ ‭supply‬ ‭shock:‬ ‭A‬ ‭signifcant‬ ‭unexpected‬ ‭increase‬ ‭in‬ ‭aggregate‬ ‭supply‬ ‭that‬ ‭shifts the AS curve to the right.‬ ‭Potential‬ ‭output/potential‬ ‭GDP/full‬ ‭employment‬ ‭GDP:‬ ‭The‬ ‭level‬ ‭of‬ ‭output‬ ‭that‬ ‭an‬ ‭economy‬ ‭can‬ ‭sustain‬ ‭in‬ ‭the‬ ‭long‬ ‭run‬ ‭while‬ ‭employing‬ ‭full‬ ‭capacity‬ ‭without‬ ‭leading‬ ‭to‬ ‭inflation.‬ ‭Private‬ ‭savings:‬ ‭The‬ ‭income‬ ‭left‬ ‭after‬ ‭deducting consumption and taxes.‬ ‭Production‬ ‭Possibilities‬ ‭Curve‬ ‭(PPC):‬ ‭A‬ ‭simplifed‬ ‭representation‬‭of‬‭the‬‭maximum‬‭level‬ ‭of‬ ‭output‬ ‭combinations‬ ‭an‬ ‭economy‬ ‭can‬ ‭produce‬‭given‬‭the‬‭available‬‭resources‬‭and‬‭level‬ ‭of technology.‬ ‭Productivity:‬ ‭The output per unit of input.‬ ‭Present‬ ‭value:‬ ‭The‬ ‭current‬ ‭value‬ ‭of‬ ‭a‬ ‭future‬ ‭amount‬‭of‬‭money‬‭or‬‭cash‬‭flow‬‭given‬‭a‬‭specifed‬ ‭rate of return.‬ ‭Public‬ ‭savings:‬ ‭The‬ ‭income‬ ‭left‬ ‭after‬ ‭subtracting government spending from taxes.‬ ‭Quantity‬ ‭theory‬ ‭of‬ ‭money:‬ ‭A‬ ‭theory‬ ‭that‬ ‭justifes‬ ‭inflation‬ ‭in‬ ‭an‬ ‭economy‬ ‭by‬ ‭excessive‬ ‭money supply.‬ ‭Real‬ ‭GDP‬ ‭per‬ ‭capita:‬ ‭A‬ ‭measure‬ ‭of‬ ‭the‬ ‭standard‬ ‭of‬ ‭living‬ ‭calculated‬ ‭as‬ ‭the‬ ‭output‬ ‭(GDP) per person at constant prices.‬ ‭Real‬ ‭values:‬ ‭Measurements‬ ‭of‬ ‭variables‬ ‭at‬ ‭constant prices to adjust for inflation.‬

‭Recession/downturn:‬ ‭A‬ ‭phase‬ ‭of‬ ‭the‬‭business‬ ‭cycle‬‭characterized‬‭by‬‭a‬‭decline‬‭in‬‭real‬‭GDP‬‭and‬ ‭employment.‬ ‭Recessionary/negative‬ ‭output‬ ‭gap:‬ ‭The‬ ‭gap‬ ‭created‬ ‭when‬ ‭actual‬ ‭output‬ ‭is‬ ‭below‬ ‭the‬ ‭economy’s full employment level.‬ ‭Remittances:‬ ‭Transfers‬ ‭of‬ ‭money‬ ‭from‬ ‭people‬ ‭working‬‭abroad‬‭for‬‭a‬‭year‬‭or‬‭more‬‭back‬‭to‬‭their‬ ‭families at home.‬ ‭Research‬ ‭and‬ ‭development‬ ‭(R&D):‬ ‭The‬ ‭systematic‬ ‭investigation,‬ ‭experimentation,‬ ‭and‬ ‭innovation‬ ‭processes‬ ‭aimed‬ ‭at‬ ‭creating‬ ‭new‬ ‭knowledge,‬ ‭products,‬ ‭or‬ ‭technologies,‬ ‭or‬ ‭improving existing ones.‬ ‭Reserve‬ ‭market‬ ‭model‬ ‭graph:‬ ‭A‬ ‭graph‬ ‭that‬ ‭represents‬ ‭the‬ ‭market‬ ‭for‬ ‭reserves‬ ‭and‬ ‭the‬ ‭difference‬ ‭between‬‭limited‬‭and‬‭ample‬‭reserves‬ ‭banking systems.‬ ‭Reserve‬ ‭requirement/required‬ ‭reserve‬ ‭ratio‬ ‭(rr):‬ ‭The‬ ‭required‬ ‭percentage‬ ‭of‬ ‭deposits‬ ‭that‬ ‭commercial‬‭banks‬‭should‬‭keep‬‭in‬‭vaults‬‭without‬ ‭loaning them out.‬ ‭Required‬‭reserves:‬ ‭The‬‭portion‬‭of‬‭reserves‬‭that‬ ‭banks‬ ‭are‬ ‭required‬ ‭to‬ ‭keep‬ ‭aside‬ ‭with‬ ‭the‬ ‭central bank without loaning them out.‬ ‭Savings-investment‬ ‭identity:‬ ‭An‬ ‭equation‬ ‭showing‬ ‭that‬ ‭savings‬ ‭and‬ ‭investment‬ ‭spending‬ ‭are‬ ‭always‬ ‭equal‬ ‭to‬ ‭each‬ ‭other,‬ ‭because‬ ‭investment is funded by savings.‬ ‭Scarcity:‬ ‭A‬ ‭situation‬ ‭that‬ ‭arises‬ ‭when‬ ‭limited‬ ‭resources‬ ‭are‬ ‭not‬ ‭enough‬ ‭to‬ ‭meet‬ ‭unlimited‬ ‭wants and needs.‬ ‭Seasonal‬ ‭unemployment:‬ ‭Unemployment‬ ‭that‬ ‭occurs‬ ‭at‬ ‭particular‬‭times‬‭of‬‭the‬‭year‬‭when‬‭the‬ ‭demand‬‭for‬‭a‬‭certain‬‭good‬‭or‬‭service‬‭decreases‬ ‭(e.g.,‬ ‭drop‬ ‭in‬ ‭the‬ ‭demand‬ ‭for‬ ‭ski‬ ‭equipment‬ ‭during summer).‬

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