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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