MACROECONOMICS Study guide for EOC

 Macroeconomics is the study of the economics of a nation as a whole.  GDP- (gross domestic product) is the total value of all final goods and services produced in an economy.  CPI- (consumer price index)-measures monthly changes in the costs of products by monitoring the prices that are typically purchased (e.g. bread, milk etc)… the reason is to see if inflation is occuring.  National Debt- the amount of money owed by the federal government  National deficit- how much money over budget the government is in a given year.

 Total exports – total imports = net exports  Unemployment- Anyone who is actively looking for a job and cannot find one are considered unemployed.  Cyclical unemployment- losing your job during the contraction phase and regaining employment during an expansion phase.  Structural unemployment- lacking the skills needed to get a job (your skills are outdated)  Frictional unemployment- taking time to find a job (just graduated college, quit, were fired etc…)

 Fiscal Policy- how the government chooses to tax and spend.  Aggregate Supply- the total amount of goods available  Aggregate Demand- the total demand for goods C+I+G+NX  Contraction- GDP is falling, interest rates are rising, unemployment is rising  Recession is a contraction for -2-3 quarters in a row.  Depression is a deep and prolonged recession

 Trough is the lowest point when the economy stops declining.  Expansion is when GDP is going up, unemployment rates are falling and interest rates are generally low  Peak is the height of the expansion when economic growth stops.

 Federal Reserve- The bank of banks, controls the supply of money  Monetary Policy- policy on how the Fed will control the money supply  1. Buying (big) or Selling (small) bonds  2. Discount rate- the interest rate charged to banks  3. Reserve requirement- the amount of money a bank must keep on reserve  #2 & #3 raising will cause a decrease in money  Lowering will cause an increase

 Federal Reserve  #1 Board of Governors  #2 Federal Open Market Committee  #3 12 Regional Federal Reserve Banks  #4 Private member banks

 Tight money- trying to reduce the money supply  Loose money- increasing the money supply  Contractionary policy- wanting to shrink the money supply  Expansionary policy- wanting to increase the money supply