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Macroeconomics
the study of structure and performance of national economies and government policies that affect economic performance
Aggregation
from microeconomics to macroeconomics
Business cycle
Short-run contractions and expansions in economic activity
Average Labor Productivity
the amount of output produced per unit of labor input
Closed Economy
one that does not interact economically with the rest of the world
Deflation
a situation in which the prices of most goods and services fall over time
Economic Model
a simplified description of some aspect of the economy, usually expressed in mathematical form
Economic Theory
a set of ideas about the economy that has been organized in a logical framework
Empirical Analysis
a comparison of the implications of an economic theory or model with real-world data
Equilibrium
a situation in which the quantities demanded and supplied are equal in all markets
Fiscal Policy
policy concerning the level and composition of government spending and taxation
Inflation
a situation in which the prices of most goods and services are rising over time
Invisible Hand
the idea that if there are free markets and individuals conduct their economic affairs in their own best interests, the overall economy will work well
Macroeconomics
is the study of the structure and performance of national economies and of the policies that governments use to try to affect economic performance.
Monetary Policy
determines the level and rate of growth of the nation’s money supply, which is under the control of a government institution known as the central bank
Normal Analysis
an analysis of policy that tries to determine whether a certain policy should be used; involves both analysis of the consequences of the policy and value judgments about the desirability of those consequences
Open Economy
one that has extensive trading and financial relationships with other national economies
Positive analysis
an analysis of the economic consequences of a policy that doesn’t address the question of whether those consequences are desirable
Stagflation
the simultaneous existence of both high unemployment and high inflation
Trade Deficit
when imports exceed exports
Trade Surplus
when exports exceed imports
Unemployment
the number of people who are available for work and are actively seeking work but cannot find jobs
Business Cycle
short-run, but sometimes sharp, contractions and expansions in economic activity
Recession
The downward phase of a business cycle, during which national output may be falling or perhaps growing only very slowly
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