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Macroeconomic Terms

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Macroeconomic Terms

Define the following terms in your words.

Term | Definition | Definition Source | Gross Domestic Product (GDP) | GDP is the total market value of all goods and services produced within an economy in a one year period. | | Real GDP | Real GDP is the total amount of goods and services produced, adjusted for price level changes. | | Nominal GDP | When the current prices are used to measure the amount of goods or services. | | Unemployment rate | The unemployment rate is the amount of individuals in a society that are not working. It can be calculated by dividing the unemployed individuals by the amount of people actually in the labor force then multiply by 100. | | Inflation rate | The measurement of how fast money loses its value. Measures the prices of items and services increases over a period of time.Inflation may happen when too much money is printed or important or necessary expenses increase in price. | | Fiscal Policy | Government policies that are related to interest rates, taxes and how much people spend. Affects economic variables such as tax rates, interest rates, and government programs that influence prices. | | Monetary Policy | The actions the Board of Governors of the Federal Reserve System make in order to influence the money supply and interest rates. | | Aggregate Demand (AD) Curve | “A demand curve is the graphic representation of the relationship between price and quantity demanded.” (Colander, p. 78) “Aggregate demand is the total demand by domestic and foreign households and firms for resources from abroad” Economics Online, n.d.) | | Macroeconomics | Macroeconomics – is the study of the economy as a whole. It takes into consideration the inflation, unemployment, business cycles, and growth. | |

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