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Economics Sample Unit 4 Macroeconomics
Document Set
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Macroeconomic Measures
GDP Consumer spending (C) Investment (I) Fixed Capital Real Estate Excess Inventories Government Spending (G) Net Exports (X-M) Exports (X) Imports (M) Unemployment Cyclical Frictional Structural Seasonal Inflation Consumer Price Index (CPI) Producer Price Index (PPI) GDP Deflator
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The Macro Economy
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Foreign Sector Savings Government
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CPI- All, Medical Care, & Apparel
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CPI for all Urban Consumers
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Inflation Graphic Organizer
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Aggregate Demand Total Spending in the Economy
Nominal Spending= C+I+G+Xn (X-M)
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Aggregate Supply Total Production for an Economy
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Short Run Macro Equilibrium
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Long Run Aggregate Supply=PPC Production Point “A” is at Full Employment
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Economic Growth =
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Full Employment Production
Current production (Yfe) at Full Employment
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Recessionary Gap Current Production (Ye) below Full Employment
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Inflationary Gap Current Production (Ye) above Full Employment
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https://research.stlouisfed.org/dashboard/7191
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Business Cycle Peak- Highest point in the Business Cycle
Contraction- Stage in which the economy has declining Real GDP Recession- Two quarters (6 Months) of declining Real GDP Trough- Lowest point of the Business Cycle Recovery- Signals end of a Recession with increasing Real GDP Expansion- Growing economy until it reaches a Peak
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The Real Business Cycle
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The Federal Reserve System
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Monetary Policy Recession Buy Bonds Increasing the Money Supply
Inflationary Gap Sell Bonds Decreasing the Money Supply Raise the Discount Rate Raise the Reserve Requirement Raise Interest on Reserves Monetary Policy Recession Buy Bonds Increasing the Money Supply Lower the Discount Rate Lower the Reserve Requirement Lower Interest on Reserves Goals of The Federal Reserve Price Stability Full Employment
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Fiscal Policy Recession: Decrease Taxes Increase Government Spending
Deficit Spending = Increases Long Run Debt Inflationary Gap Increase Taxes Decrease Government Spending Surplus= Decreases Long run Debt Expansionary Fiscal Policy Contractionary Fiscal Policy
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Federal Budget- Deficit
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