Macroeconomic Definition

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Define Absolute Advantage
An economy has an absolute advantage in good X if it can produce more of X than any other country using the same resources
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Define absolute poverty
Absolute poverty occurs when a person’s income is below the minimum income required to afford basic necessities for human survival (food, water, shelter, clothing)
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Define Actual GDP Growth
Actual GDP growth is the growth in real GDP that currently occurs
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Define Aggregate Demand
Aggregate demand (AD) is the total amount of expenditure on goods and services in an economy
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Define Aggregate Supply
Aggregate supply is the total amount of supply of goods and services in an economy
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Define Automatic Stabilizers
Automatic stabilizers are changes in government expenditure and taxation that automatically kick-in to help reduce the ups and downs of the business cycle
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Define Balance of Payments
The balance of payments (BoP) is a record of all external financial transactions between one economy and the rest of the world
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Define Business Cycles
Business cycles are the pattern of booms and recessions in an economy over a period of time. Business cycles are the fluctuation of real GDP around the long-term trend growth rate.
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Define Capital Flight
A dangerous situation, capital flight occurs when international investors suddenly lose confidence in an economy and rapidly withdraw their capital from that economy
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Define Comparative Advantage
An economy has a comparative advantage in good X if it can produce X at a lower opportunity cost than any other country
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Define Consumption
Consumption is total consumer expenditure on durables, non-durables and services
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Define Contractionary Fiscal Policy
A contractionary fiscal policy means so AD falls. Multiplier effects make AD fall further. AD shifts left so inflation falls and real GDP falls
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Define Cost-Push Inflation.
Cost-push inflation occurs when LRAS shifts left because resource prices rise or wages rise, firms’ costs rise and their prices rise
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Define Credit Crunch
A situation where banks and other financial institutions decrease their lending or stop lending altogether
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Define Crowding In
An increase in government spending causes an increase in private investment (maybe the government invests in the infrastructure which encourages private firms to invest)
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Other cards in this set

Card 2

Front

Define absolute poverty

Back

Absolute poverty occurs when a person’s income is below the minimum income required to afford basic necessities for human survival (food, water, shelter, clothing)

Card 3

Front

Define Actual GDP Growth

Back

Preview of the front of card 3

Card 4

Front

Define Aggregate Demand

Back

Preview of the front of card 4

Card 5

Front

Define Aggregate Supply

Back

Preview of the front of card 5
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