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MACROECONOMICS Study guide for EOC
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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.
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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 Structural unemployment- lacking the skills needed to get a job (your skills are outdated) Frictional unemployment- taking time to find a job (just graduated college, quit, were fired etc…)
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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
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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.
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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
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Federal Reserve #1 Board of Governors #2 Federal Open Market Committee #3 12 Regional Federal Reserve Banks #4 Private member banks
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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
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