Macroeconomics

‭Self-adjustment:‬ ‭The‬ ‭process‬ ‭through‬ ‭which‬ ‭market‬‭imbalances‬‭or‬‭output‬‭gaps‬‭self-adjust‬‭to‬ ‭restore‬ ‭equilibrium‬ ‭as‬ ‭prices‬ ‭become‬ ‭more‬ ‭flexible in the long run.‬ ‭Short-run‬ ‭aggregate‬ ‭supply‬ ‭(SRAS):‬ ‭The‬‭total‬ ‭output‬‭of‬‭an‬‭economy‬‭supplied‬‭when‬‭the‬‭prices‬ ‭of‬‭factors‬‭of‬‭production‬‭are‬‭sticky,‬‭meaning‬‭that‬ ‭they‬‭did‬‭not‬‭have‬‭the‬‭time‬‭to‬‭adjust‬‭to‬‭economic‬ ‭changes.‬ ‭Short-run‬ ‭aggregate‬ ‭supply‬ ‭curve‬ ‭(SRAS‬ ‭curve):‬ ‭A‬ ‭line‬ ‭that‬ ‭shows‬ ‭the‬ ‭positive‬ ‭relationship‬ ‭between‬ ‭short-run‬ ‭aggregate‬ ‭supply‬ ‭and‬ ‭the‬ ‭price‬ ‭level,‬ ‭meaning‬ ‭that‬ ‭when‬ ‭the‬ ‭price‬ ‭level‬ ‭increases,‬ ‭SRAS‬ ‭increases,‬ ‭and‬ ‭vice versa.‬ ‭Short-run‬ ‭Phillips‬ ‭curve‬ ‭(SRPC):‬ ‭A‬ ‭line‬ ‭that‬ ‭shows‬ ‭the‬ ‭negative‬ ‭relationship‬ ‭and‬ ‭trade-off‬ ‭between‬ ‭inflation‬ ‭and‬ ‭unemployment‬ ‭in‬ ‭the‬ ‭short run.‬ ‭Short-run‬ ‭macroeconomic‬ ‭equilibrium:‬ ‭The‬ ‭point‬ ‭of‬ ‭intersection‬ ‭between‬ ‭the‬ ‭aggregate‬ ‭demand‬ ‭and‬ ‭the‬ ‭short-run‬ ‭aggregate‬ ‭supply‬ ‭curves,‬ ‭indicating‬ ‭that‬ ‭the‬ ‭aggregate‬ ‭output‬ ‭demanded‬ ‭is‬ ‭equal‬ ‭to‬ ‭the‬ ‭short-run‬ ‭aggregate‬ ‭output supplied.‬ ‭Simple‬ ‭circular‬ ‭flow‬ ‭of‬ ‭incomes‬ ‭and‬ ‭expenditures:‬ ‭A‬ ‭diagram‬ ‭that‬ ‭shows‬ ‭how‬ ‭goods,‬ ‭services,‬ ‭money,‬ ‭and‬ ‭factors‬ ‭of‬ ‭production‬ ‭flow‬ ‭between‬‭households‬‭and‬‭frms‬ ‭in a closed economy.‬ ‭Simple‬ ‭money‬ ‭multiplier‬ ‭(MM):‬ ‭The‬ ‭ratio‬ ‭of‬ ‭money‬ ‭supply‬ ‭to‬ ‭the‬ ‭monetary‬ ‭base.‬ ‭It‬ ‭shows‬ ‭how‬‭many‬‭additional‬‭dollars‬‭will‬‭be‬‭created‬‭with‬ ‭each‬ ‭addition‬ ‭to‬ ‭the‬ ‭monetary‬ ‭base,‬ ‭such‬ ‭as‬ ‭when bank reserves increase.‬ ‭Specialization:‬ ‭The‬ ‭focus‬ ‭of‬ ‭individuals,‬ ‭frms,‬ ‭and‬‭economies‬‭on‬‭producing‬‭what‬‭they‬‭have‬‭an‬

‭advantage‬ ‭in;‬ ‭usually‬ ‭based‬ ‭on‬ ‭comparative‬ ‭advantage.‬ ‭Stock:‬ ‭A‬‭share‬‭of‬‭ownership‬‭in‬‭a‬‭frm‬‭that‬‭pays‬ ‭dividends.‬ ‭Store‬ ‭of‬ ‭value:‬ ‭The‬ ‭ability‬‭of‬‭an‬‭asset‬‭to‬‭allow‬ ‭people‬ ‭to‬ ‭save‬ ‭because‬ ‭it‬ ‭carries‬ ‭purchasing‬ ‭power from one period of time to another.‬ ‭Structural‬ ‭unemployment:‬ ‭Unemployment‬ ‭caused‬‭by‬‭changes‬‭in‬‭the‬‭structure‬‭of‬‭economic‬ ‭activity,‬ ‭such‬ ‭as‬ ‭technological‬ ‭advancements‬ ‭that replace workers.‬ ‭Substitutes:‬ ‭Alternative‬‭goods‬‭or‬‭services,‬‭such‬ ‭as‬ ‭two‬ ‭different‬ ‭brands‬ ‭of‬ ‭chocolate‬ ‭that‬ ‭can‬ ‭substitute each other.‬ ‭Supply:‬ ‭The‬ ‭willingness‬ ‭and‬ ‭ability‬ ‭of‬ ‭a‬ ‭producer‬ ‭to‬ ‭provide‬ ‭a‬ ‭good‬ ‭or‬ ‭service‬ ‭at‬ ‭given‬ ‭prices.‬ ‭Supply‬ ‭schedule:‬ ‭A‬ ‭table‬ ‭that‬ ‭shows‬ ‭the‬‭data‬ ‭from‬ ‭which‬ ‭a‬ ‭supply‬ ‭curve‬ ‭is‬ ‭drawn,‬ ‭including‬ ‭price and quantity supplied.‬ ‭Supply-side‬ ‭policy:‬ ‭An‬ ‭economic‬ ‭policy‬ ‭that‬ ‭changes‬ ‭macroeconomic‬ ‭aggregates‬ ‭by‬ ‭targeting aggregate supply.‬ ‭Sustainable‬ ‭economic‬ ‭growth:‬ ‭Economic‬ ‭growth‬ ‭that‬ ‭also‬ ‭protects‬ ‭future‬ ‭generations’‬ ‭ability to experience economic growth.‬ ‭Tax‬ ‭multiplier:‬ ‭The‬ ‭ratio‬ ‭of‬ ‭a‬ ‭change‬ ‭in‬ ‭real‬ ‭GDP to a change in taxes.‬ ‭Technology:‬ ‭The‬ ‭application‬ ‭of‬ ‭scientifc‬ ‭knowledge‬ ‭and‬ ‭tools‬ ‭to‬ ‭create,‬ ‭modify,‬ ‭or‬ ‭enhance‬ ‭products,‬ ‭processes,‬ ‭or‬ ‭systems‬ ‭for‬ ‭practical purposes.‬ ‭Terms‬ ‭of‬ ‭trade/trading‬ ‭price:‬ ‭The‬ ‭ratio‬ ‭at‬ ‭which‬ ‭a‬ ‭country‬ ‭can‬ ‭trade‬ ‭domestic‬ ‭products‬ ‭for imported ones.‬

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