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AP Macroeconomics
50 flashcards
A trade surplus occurs when a country's exports exceed its imports.
GDP (Gross Domestic Product) is the total value of all final goods and services produced within a country's borders in a given period, usually a year.
The four main components of GDP are personal consumption expenditures, gross private domestic investment, government spending, and net exports (exports - imports).
Inflation is a sustained increase in the general price level of goods and services in an economy over time.
The unemployment rate is the percentage of the labor force that is jobless and actively seeking employment.
Fiscal policy refers to the government's use of spending and taxation to influence the economy.
Monetary policy refers to the actions taken by a nation's central bank to control the money supply and achieve macroeconomic goals such as low inflation and economic growth.
The business cycle refers to the fluctuations in economic activity, including periods of expansion (growth) and contraction (recession).
The Phillips curve shows the relationship between unemployment and inflation rates, suggesting that lower unemployment is associated with higher inflation.
Aggregate demand is the total demand for final goods and services in an economy at a given time and price level.
Aggregate supply is the total supply of goods and services available in an economy at a given price level over a particular period of time.
Comparative advantage is the ability of a country to produce a good or service at a lower opportunity cost than another country.
The balance of payments is a record of all economic transactions between residents of a country and the rest of the world over a specific period.
The exchange rate is the price of one currency in terms of another currency.
A trade deficit occurs when a country's imports exceed its exports.
Productivity is a measure of the efficiency with which inputs, such as labor and capital, are used to produce outputs or goods and services.
Economic growth refers to an increase in the production of goods and services over time, typically measured by the increase in real GDP.
The circular flow model illustrates the movement of resources, goods and services, and money among households, businesses, and the government in an economy.
The multiplier effect describes how an initial increase in spending leads to greater economic activity and income through successive rounds of spending.
The crowding-out effect occurs when increased government spending leads to higher interest rates, reducing private investment spending.
The law of diminishing returns states that as additional units of a variable input are added to a fixed input, the marginal output will eventually decline.
Economic efficiency refers to a situation where resources are allocated in a way that maximizes the production of goods and services given the available inputs and technology.
Market failure occurs when the free market fails to allocate resources efficiently, leading to a situation where the marginal social cost does not equal the marginal social benefit.
An externality is a cost or benefit that affects a third party not directly involved in an economic transaction.
A public good is a good or service that is non-excludable and non-rivalrous, meaning that it is available to all and one person's consumption does not reduce the availability for others.
Income inequality refers to the uneven distribution of income among individuals or households within an economy.
The poverty line is the minimum level of income deemed adequate to meet basic needs, and individuals or families with incomes below this level are considered to be living in poverty.
The Gini coefficient is a measure of income inequality, ranging from 0 (perfect equality) to 1 (perfect inequality).
The consumer price index (CPI) is a measure of the average change in prices paid by consumers for a basket of goods and services.
The producer price index (PPI) measures the average change in selling prices received by domestic producers of goods and services over time.
The unemployment rate is the percentage of the labor force that is jobless and actively seeking employment.
The natural rate of unemployment is the rate of unemployment that exists when the labor market is in equilibrium and there is no cyclical unemployment.
Frictional unemployment is temporary unemployment caused by the time it takes workers to find new jobs after leaving their old ones.
Structural unemployment is unemployment caused by a mismatch between the skills and locations of workers and the requirements of available jobs.
Cyclical unemployment is unemployment caused by a lack of demand for goods and services during an economic downturn or recession.
The money supply refers to the total amount of money in an economy, including currency and various types of deposits and accounts.
The Federal Reserve System is the central banking system of the United States, responsible for conducting monetary policy and ensuring the stability of the financial system.
A budget deficit occurs when a government's spending exceeds its revenue over a given period.
The national debt is the total amount of outstanding debt owed by the federal government.
Mercantilism was an economic theory and practice prevalent in Europe from the 16th to the 18th century, which promoted government intervention to achieve a favorable balance of trade and accumulate precious metals.
The Laffer curve is a theoretical representation of the relationship between tax rates and government revenue, suggesting that as tax rates increase, revenue will initially rise but eventually fall due to disincentives for economic activity.
The multiplier effect describes how an initial increase in spending leads to a larger increase in economic activity and income through successive rounds of spending.
The circular flow model illustrates the movement of resources, goods and services, and money among households, businesses, and the government in an economy.
The production possibilities frontier (PPF) is a curve that shows the maximum possible output combinations of two goods or services an economy can produce with its available resources and technology.
The law of supply states that, all else being equal, as the price of a good or service increases, the quantity supplied of that good or service will increase.
The law of demand states that, all else being equal, as the price of a good or service increases, the quantity demanded of that good or service will decrease.
Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
Price elasticity of supply measures the responsiveness of quantity supplied to a change in price.
GDP per capita is a measure of a country's economic output per person, calculated by dividing the GDP by the total population.
The Lorenz curve is a graphical representation of income inequality, showing the cumulative share of income earned by different percentages of the population.