CLEP Macro Economics

O open market operations federal reserve purchases

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o Open market operations: Federal Reserve purchases and sales of government securities for the purpose of altering bank reserves. o Opportunity cost: The benefit forgone of the next-best alternative. o Outsourcing: When businesses relocate production that was once done in the home country to foreign countries. P o Partnership: An association of two or more persons who carry on as co–owners of a business for profit. o Peak: A phase in the business cycle in which growth is strong and employment is high. o Per capita real output: The average gross domestic product; also referred to as per capita GDP. o Personal consumption: Household expenditures for products including both durable and nondurable goods and services. o Personal consumption expenditures: Disposable income spent by households on durable and nondurable goods and services. o Personal distribution of income: The division of disposable income among individual households. o Phillips Curve: A graphical curve in economics that shows a historical inverse relationship between unemployment rates and inflation rates; when inflation is low, unemployment is high, and vice versa. o Potential output: The production that is achieved at the target rate of unemployment and capacity utilization; the real GDP or production that a nation can produce when it fully employs its available resources. o Price index: A measure of the price of a specific set of products in a specific year compared with the price of the same products in another year used as a reference point. o Private corporation: A corporation owned by one or just a handful of people intimately involved with running the business. o Product market: Any place where finished goods and services (products) are bought and sold. o Production: The use of land, labor, capital, and entrepreneurship to produce outputs of goods and services. o Production possibility curve: A curve diagram in economics that illustrates the potential total output (GDP) combinations of any two goods in an economy. o Profits: The money earned by a business after operating costs and salaries. This is the difference between production costs and what a consumer pays for a product and is represented as the total revenue minus the total costs. o Public corporation: Corporations in which anyone can buy, sell, or trade its stock.
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Q o Quantity-adjusting markets: Markets in which businesses respond to changes in demand by modifying their production instead of changing their prices; also referred to as posted-price markets. R o Rational behavior: A decision-making behavior that is based on weighing the costs and benefits of different courses of action. o Real GDP: This is the gross domestic product statistic that has been adjusted for price changes. o
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o Open market operations Federal Reserve purchases and...

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