economiiiiiiiiics vocab
Terms
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federal reserve
- The central bank of the United States. Its main function is controlling the money supply through monetary policy.
- CPI
- measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period. Changes are used to measure inflation
- Market Economy
- economic decisions made by people
- Opportunity Cost
- highest valued alternative given up
- inelastic demand
- price has little impact on demand
- capital resources
- factories, buildings, machinery, equipment
- inferior good
- good people buy less of when imcome rises
- normal good
- good people buy more of when income rises
- GDP
- total value of all goods produced in year
- inflation
- increase in price level
- recession
- decline in economy for at least six months
- unemployment
- arent working but seeking a job
- real gdp
- gdp adjusted for inflation
- real income
- income adjusted for inflation
- cyclical unemployment
- unemployment caused by recession and decline in spending
- demand pull inflation
- demand exceeds supply
- cost push inflation
- companies have to pay more to produce
- investment spending
- capital goods, inventory and construction
- intermediate goods
- item goes into making final item
- transfer payments/entitlements
- bonds, securities, welfare, tax refunds
- index of leading econ indicators
- predict future of economy
- stagflation
- unemployment and inflation
- Fiscal Policy
- gov spending and taxation stabilize economy
- Budget defecit
- spend more than take in
- Budget surplus
- take in more than spend
- discretionary stabilizers
- require gov approval to fix economy
- automatic stabilizers
- benefits kick in to fix economy with no approval needed
- nation debt
- money owed by gov
- expansionary policy
- fix recession more bonds lower reserve require and interest
- contractionary policy
- fix inflation
- monetary policy
- Fed does to regulate money supply
- federal funds rate
- interest banks charge eachother to borrow
- prime interest rate
- banks charge best customers
- discount rate of interest
- interest fed charges banks to borrow money
- reserve requirement
- % of loan banks have to keep
- excess reserve
- % of loan banks can loan out
- fiat money
- declared money by gov
- M1
- currency and checking accounts
- M2
- M1 + savings
- checkable deposits/demand deposits
- checking accounts
- crowding out
- gov borrows money and interest rate increases
- absolute advantage
- can produce more of item with less resources
- comparative advantage
- produce item at lower opp cost
- balance of trade
- difference between value of total imports and exports
- trade defecit
- imports greater than exports
- trade surplus
- exports greater than imports
- capital account
- equipment, machinery, buildings stock bonds
- current account
- exports and imports and money transfers
- debit
- money leaves
- credit
-
money enters