Macroeconomics Study Guide

Macroeconomics Study Guide - Macroeconomics Study Guide...

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Macroeconomics Study Guide TERMS: Aggregate demand – the quantity demanded of all goods and services at different price levels. Aggregate supply- the quantity supplied of all goods and services at different price levels. Macro equilibrium – Cyclical deficit – the part of the budget deficit that is a result of a downturn in economic activity. Say’s law – supply creates its own demand. Production creates demand sufficient to purchase all goods and services. MPC – Marginal propensity to consume – the ratio of the change in consumption to the change in disposable income. MPS – Marginal propensity to save – the ratio of the change in saving to the change in disposable income. Structural deficit – the part of the budget deficit that would exist even if the economy were operating at full employment. Multiplier process – the number that is multiplied by the change in autonomous spending to obtain the overall change in total spending. Discretionary fiscal policy – deliberate changes of government expenditures and/or taxes to achieve particular economic goals. Automatic fiscal policy – changes in government expenditures and/or taxes that occur automatically without congressional action. Full employment GDP – Crowding out – The decrease in private expenditures that occurs as a consequence of increased government spending or the financing needs of a budget deficit. Wealth effect – Recessionary gap – The condition where the Real GDP the economy is producing less than the natural real GDP and the unemployment rate is greater than the natural unemployment rate. Inflationary gap – where real GDP the economy is producing is greater than the
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This note was uploaded on 04/03/2008 for the course ECON Econ2301 taught by Professor Hudgins during the Spring '08 term at Collin College.

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Macroeconomics Study Guide - Macroeconomics Study Guide...

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