MACRO - IB Economics Terms

macroeconomics

study of aggregate factors, such as employment, price level & national income

GDP

total market value of all final goods and service produced in an economy in a given time period (measures value of production)

economic growth

expansion of economy's production possibilities (outward shift of PPF) - measured by increase in real GDP

economic growth rate

% change in quantity of goods/services produced from one year to the next

real GDP

value of total production of all the nation's farms, factories, shops and offices measured in the prices of a single year

potential GDP

value of real GDP when all the economy's factors of production are fully employed

recession

period during which real GDP decreases for at least 2 successive quarters

expansion

period during which real GDP increases

unemployment

state in which a person does not have a job, but is available for work, willing to work & has made some effort to find work within the last 4 weeks

labour force

# of people employed & unemployed

unemployment rate

% of people in the labour force who are unemployed (part time employees considered employed, even if they want to work full time)

involuntary part time rate

% of people in labour force who have part time jobs and want full time jobs

employment-to-population ratio

% of working age people who have jobs

full employment

occurs when the labour market is in equilibrium (those who want a job have one)

natural rate of unemployment

unemployment rate at full employment

inflation rate

% change in the price level

government budget surplus

government collects more in taxes than it spends

government budget deficit

government spends more than it collects in taxes

fiscal policy

use of federal budget to achieve macroeconomic objectives (such as full employment, sustained long-term economic growth, and price level stability)

monetary policy

changing interest rates and changing amount of money in economy

purchasing power parity

allows us to account for differences in value of dollar and compare "what your income can buy domestically" (how much of something you can buy with $1 USD)

human development index

combines GDP per capita (PPP-adjusted), life expectancy at birth and adult literacy; way to measure growth

physical quality of life index

combines life expectancy at birth, infant mortality and adult literacy; way to measure growth

nominal GDP

value of all final goods/services produced in a given year

GDP deflator

average of the prices of the goods in GDP in the current year as a % of the base year prices

aggregate demand

total demand for all goods and services in an economy in a given time period

aggregate supply

total supply of goods and services produced by an economy during a specific time period

inflation

sustained increase in the average level of prices

expansionary fiscal policy

increase in government expenditures or decrease in tax revenues (AD curve shift right)

contractionary fiscal policy

decrease in government expenditures or increase in tax revenues (AD curve shift left)

money

any commodity or token that is generally acceptable as a means of payment

chartered bank

private firm that is licensed to receive deposits and make loans

reserves

cash in vault and deposits in Bank of Canada

crowding out

tendency for expansionary fiscal policy to decrease investment

crowding in

tendency for expansionary fiscal policy to increase investment

supply side policies

policies that affect cost to product (wages, raw materials, electricity, oil, taxes)