Macroeconomics Final Study Guide

Economics

• expansionary fiscal policy is the best course of action because it is designed to increase aggregate demand and therefore raise real GDP
• the social science concerned with how individuals, institutions, and society make optimal(best) choices under conditions of scarcity
• - the U.S. president appoints them

Marginal Analysis

• The comparison of marginal (extra or additional) benefits and marginal costs, usually for decision making.
• expansionary fiscal policy is the best course of action because it is designed to increase aggregate demand and therefore raise real GDP
• the change in the quantity demanded of a good that results from the change in real income (purchasing power) caused by a change in the product's price

Economic Resources or Factors of Production

• land

• labor

• capital

• entrepreneur

Utility

• a period of declining real GDP, accompanied by lower real income and higher unemployment.
• the satisfaction or pleasure a consumer obtains from the consumption of a good or service
• - government purchases of goods and services = G

Production Possibilities Curve

• - rents
• A curve showing the different combinations of two goods or services that can be produced in a full-employment
• through the guiding function of prices and profit is a core element of the market system

Command System

• government owns most property resources and economic decision making is set by a central economic plan created and enforced by the government
• - wages
• the method that adds all the income generated by the production of final goods and services to measure the gross domestic product.

Market System:

• - to control the money supply
• business activity has reached a temporary minimum; at the trough the economy experienced substantial unemployment and real GDP is less than potential output
• mixture of centralized government economic initiatives and decentralized actions taken by individuals and firms

Competition

• more broadly defined supply
• The effort and striving between two or more rivals to secure the business of one or more third parties by offering the best possible terms.
• a movement of the entire demand curve

What Will Be Produced?

• factors other than price that determine the quantities supplied of a good or service
• the goods and services that can produce a continuing profit
• products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).

How Will the Goods and Services Be Produced?

• In combinations and ways that minimize the cost per unit of output
• the goods and services that can produce a continuing profit
• phase of the business cycle in which real GDP, income, and employment rise.