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BUAD-350
Macroeconomics
| Term | Definition |
|---|---|
| Acyclical (8,284) | Not displaying a regular pattern of behavior over the business cycle |
| Aggregate Demand (8,302) | The economywide demand for output when the goods market and the asset market are in equilibrium; the level of output corresponding to the intersection of the IS and LM curves |
| Aggregate Demand for Labor (3,75) | The sum of the labor demands of all employers in an economy |
| Aggregate Demand Management / Macroeconomic Stabilization / Stabilization Policy (11,420) | The use of monetary and fiscal policies, which shift the AD curve, to try to smooth out the business cycle |
| Aggregate Demand Shocks (11,420) | Shocks to the economy that shift the IS curve or the LM curve and thus affect the aggregate demand for output |
| Aggregate Supply of Labor (3,75) | The sum of the labor supplied by everyone in the economy |
| Aggregation (1,10) | the process of adding individual economic variables to obtain economywide totals |
| Automatic Stabilizers (15,580) | Provisions in the government's budget that automatically cause government spending to rise or fall when GDP falls |
| Bank Reserves (14,527) | Liquid assets held by banks to meet the demands for withdrawals by depositors or to pay the checks drawn on depositors' accounts |
| Bank Run (14,532) | A large-scale withdrawal of deposits from a bank, caused by depositors' fear that the bank may go bankrupt and not pay depositors in full |
| Board of Governors of the Federal Reserve System (14,539) | A group of 7 governors, appointed by the President to staggered 14 year terms, that provides the leadership of the Federal Reserve System |
| Boom / Expansion (8,275) | In a business cycle, the period of time during which aggregate economic activity grows |
| Borrowing Constraint (4,119) | A restriction imposed by lenders on the amount that someone can borrow. If it causes an individual to borrow less than he would choose to borrow in the absence of the constraint, the borrowing constraint=binding; otherwise = nonbinding |
| Budget Constraint (4,150) | A relation that shows how much current and future consumption a consumer can afford given the consumer's initial wealth, current and future income, and the interest rate. |
| Budget Line (4,150) | The graph of the consumer's budget constraint; shows graphically the combos of current and future consumption a consumer can afford given the consumer's initial wealth, current + future income, and the interest rate |
| Business Cycle (8,276) | A decline in aggregate economic activity (a contraction/recession) to a low point (a trough), followed by a recovery of activity (an expansion/boom) to a high point (a peak). A complete one can be measured from peak to peak or trough to trough |
| Absorption (5,178) | Total spending by domestic residents, firms, and governments; equal to C+I+G |
| Balance of Payments / Official Settlements Balance (5,170/171) | the net increase (domestic less foreign) in a country's official reserve assets |
| Balance of Payments Accounts (5,166) | The record of a country's international transactions, consisting of the current account and the capital and financial account |
| Capital Account (5,169) | The record of unilateral transfers of assets between countries |
| Capital Account Balance (5,169) | The net flow of assets unilaterally transferred into a country |
| Capital and Financial Account (5,169) | The record of a country's international trade in existing assets, either real or financial |
| Capital Good (2,28) | A good that is produced, is used to produce other goods, and - unlike an intermediate good - is not used up in the same period that it is produced |
| Chronically Unemployed (3,91) | Workers who are unemployed a large fraction of the time |
| Classical Approach (1,15) | An approach to macro based on the assumption that wages and prices adjust quickly to equate quantities supplied and demanded in each market. Generally argue that free markets are good way to organize the econ and govt intervention = limited |
| Closed Economy (1,7) | A national economy that does not have trading or financial relationships with the rest of the world |
| Coincident Variable (8,284) | A variable with peaks and troughs that occur at about the same time as the corresponding business cycle peaks and troughs |
| Comovement (8,277) | The tendency of many economic variables to move together in a predictable way over the business cycle |
| Consumer Price Index (CPI) (2,45) | A price index calculated as the current cost of a basket of consumer goods and services divided by the cost of the basket in the base period |
| Consumption (2,31) | Spending by domestic households on final goods and services |
| Consumption-Smoothing Motive (4,106) | The preference of most people for a relatively constant or stable pattern of consumption over time, as opposed to having high consumption at some times and low consumption at others |
| Contraction / Recession (8,275) | In a business cycle, the period of time during which aggregate economic activity is falling |
| Countercyclical (8,284) | Tending to move in the opposite direction of aggregate economic activity over the business cycle (UP in contractions, DOWN in expansions) |
| Current Account (5,166) | The record of a country's international trade in currently produced goods and services |
| Current Account Balance (2,39) , (5,169) | Payments received from abroad in exchange for currently produced goods and services (including factor services), minus the analogous payments made to foreigners by the domestic economy |
| Cyclical Unemployment (3,92) | The excess of the actual unemployment rate over the natural rate of unemployment; equivalently, unemployment that occurs when output is below full-employment level |
| Deflation (1,6) | A situation in which prices of most goods and services are falling over time |
| Demand for Money (7,251) | The quantity of monetary assets, such as cash and checking accounts, that people choose to hold in their portfolios |
| Depository Institutions (14,526) | Privately owned banks and thrift institutions (such as savings and loans) that accept deposits from and make loans directly to the public |
| Depreciation (2,35) | A decline in the exchange rate |
| Depression (8,275) | A particularly severe and prolonged down-turn in economic activity |
| Desired Capital Stock (4,121) | The amount of capital that allows a firm to earn the highest possible expected profit |
| Devaluation (13,477) | A reduction in the value of a currency by official government action under a fixed-exchange-rate system |
| Diminishing Marginal Productivity (3,64) | A feature of production functions that implies that, the more a particular factor of production is used, the less output can be gained by increasing the use of that factor still further (with the usage of other factors of production held constant) |
| Discount Rate (14,541) | The interest rate charged by the Fed when it lends reserves to banks |
| Discount Window Lending (14,541) | The lending of reserves to banks by the Fed |
| Discouraged Workers (3,89) | People who stop searching for jobs because they have become discouraged by lack of success at finding a job; they are not included in the official unemployment rate |
| Discretion (14,557) | The freedom of the central bank to conduct monetary policy in any way that it believes will advance the ultimate objectives of low and stable inflation, high economic growth, and low unemployment rate |
| Distortions (15,585) | Tax-induced deviations in economic behavior from the efficient, free-market outcome |
| Economic Model (1,12) | A simplified description of some aspect of the economy, usually expressed in mathematical form |
| Economic Theory (1,12) | A set of ideas about the economy that have been organized in a logical framework |
| Effective Tax Rate (on Capital) (4,126) | A single measure of the tax burden on capital that summarizes the many provisions of the tax code that affect investment |
| Equilibrium (1,16) | A situation in which the quantities demanded and supplied are equal in a market or a set of markets |
| (Nominal) Exchange Rate (13,474) | The number of units of foreign currency that can be purchased with one unit of the home currency |
| Expectations-Augmented Phillips Curve (12,447) | An inverse relation between unanticipated inflation and cyclical unemployment |
| Expenditure Approach (2,25) | A procedure for measuring economic activity by adding the amount spent by all purchasers of final goods and services |
| Factors of Production (3,59) | Inputs to the production process, such as capital goods, labor, raw materials, and energy |
| Federal Open Market Committee (FOMC) (14,539) | A 12-member committee (consisting of the 7 govs of the Fed Res Board, the pres of the Fed Res Bank of NY, and 4 of the pres's of the other regional Fed Res Banks) that decides the course of US monetary policy |
| Fed Funds Rate (14,543) | The interest rate charged on reserves that one bank loans to another |
| Financial Account (5,169) | The record of a country's flow of assets into or out of a country (other than assets transferred unilaterally) |
| Financial Inflow (5,170) | A credit (plus) item in a country's financial account that arises when a resident of the country sells an asset to someone in another country |
| Financial Outflow (5,170) | A debit (minus) item in a country's financial account that arises when a resident of the country buys an asset from abroad |
| Fiscal Policy (1,7) | Policy concerning the level and composition of the government spending and taxation |
| Fixed-Exchange-Rate System (13,474) | A system in which exchange rates are set at officially determined levels and are changed only by direct governmental action |
| Flexible(Floating)-Exchange-Rate System (13,474) | A system in which exchange rates are not officially fixed but are determined by conditions of supply and demand in the foreign exchange market. |
| Flow Variable (2,40) | A variable that is measured per unit of time; an example is GDP, which is measured as output per year or quarter |
| Foreign Direct Investment (5,174) | The purchase or construction of capital goods by a foreign business firm |
| Foreign Exchange Market (13,474) | The market in which the currencies of different nations are traded |
| Fractional Reserve Banking (14,527) | A banking system in which banks hold reserves equal to a fraction of their deposits so that the reserve-deposit ratio is less than 1 |
| Frictional Unemployment (3,91) | The unemployment that arises as the result of the matching process in which workers arise for suitable jobs and firms search for suitable workers |
| Full-Employment Deficit (15,580) | What the government budget deficit WOULD BE, given the tax and spending policies currently in force, if the economy were operating at its full-employment level |
| Full-Employment Level of Employment (3,83) | The equilibrium level of employment, achieved after wages and prices fully adjust |
| Full-Employment Output (3,84) | The level of output that firms supply when wages and prices in the economy have fully adjusted to their equilibrium levels |
| Fundamental Identity of National Income Accounting (2,26) | The accounting identity that states that total production, total income, and total expenditure during a given period are equal |
| Fundamental Value of the Exchange Rate (13,501) | The value of the exchange rate that would be determined by the forces of supply and demand in the foreign exchange market, in the absence of government intervention |
| Golden Rule Capital-Labor Ratio (6,217) | The level of the capital-labor ratio that maximizes consumption per worker in the steady state |
| Government Capital (15,581) | Long-lived physical assets owned by the govt, such as roads and public schools |
| Government Debt (15,586) | The total value of government bonds outstanding at any given time |
| Government Outlays / Expenditures (2,38) | The govt's purchases of goods and services plus transfers and interest payments |
| Government Purchases (2,32) | Spending by the govt on currently produced goods and services |
| Government Receipts (2,38) | Taxes and other revenues collected by the govt |
| Gross Domestic Product (GDP) (2,27) | The market value of final goods and services newly produced within a nation's borders during a fixed period of time |
| Gross Investment (4,128) | The total purchase or construction of new capital goods |
| Gross National Product (GNP) (2,30) | The market value of final goods and services newly produced by domestically owned factors of production during a fixed period of time |
| Growth Accounting (6,206) | A method for breaking down total output growth into parts attributable to growth of capital, labor, and productivity |
| Growth Accounting Equation (6,205) | The prod function written in growth rate form; it states that the growth rate of output is the sum of 1: the GR of prod; 2: the elasticity of output w/r to capital times the GR of capital; 3: the elasticity of output w/r to labor times the GR of labor |
| High-Powered Money / Monetary Base(14,527) | The liabilities of the central bank, consisting of bank reserves and currency held by the nonbank public, that are usable as money |
| Income Approach (2,24) | A procedure for measuring economic activity by adding all income received, including taxes and after-tax profits |
| Income Effect (4,163) | A change in economic behavior (such as the amnt a person saves or works) in response to a change in income or wealth; graphically, a change in behavior induced by a parallel shift in the budget line |
| Income Effect of a Higher Real Wage (3,76) | The tendency of workers to supply less labor when the real wage increases, as a result of the fact that a higher real wage makes workers wealthier |
| Income Effect of the Real Interest Rate on Saving (4,112) | The tendency of savers to consume more and save less in response to an inc. in the real interest rate b/c they are made wealthier; the tendency of borrowers to consume less and save more in response to an inc. in the real IR b/c they are made less wealthy |
| Income Elasticity of Money Demand (7,256) | The percentage change in money demand resulting from a 1% increase in real income |
| Income-Expenditure Identity (2,30) | The accounting identity that states that total income (product) equals the sum of the four types of expenditure: consumption, investment, govt purchases, and net exports |
| Inconvertible Currency (13,502) | A currency that cannot be traded freely for other currencies, usually b/c of govt-imposed restrictions |
| Index of Leading Indicators (8,285) | A weighted average of economic variables that lead the business cycle, used for forecasting future business activity |
| Indifference Curve (4,152) | Shows graphically the combos of current and future consumption that yield any given level of utility |
| Inflation (1,5) | A situation in which the prices of most goods and services are rising over time |
| Instruments (14,544) | The policy tools that the Fed can use to influence the economy; they include reserve requirements, the discount rate, the interest rate on reserves, and, especially, open-market operations |
| Interest Elasticity of Money Demand (7,257) | The percentage change in money demand resulting from a 1% increase (different from a 1 percentage point increase) in the interest rate |
| Intermediate Targets / Indicators (14,544) | Macroecon. variables that the Fed cannot control directly but can influence fairly predictably and that, in turn, are related to the ultimate goals the Fed is trying to achieve. Ex: the growth rates of monetary aggregates and short-term interest rates |
| Invisible Hand (1,15) | The idea (proposed by Adam Smith) that, if there are free markets and individuals conduct their economic affairs in their own best interests, the economy as a whole will work well |
| J Curve (13,481) | The typical time pattern of the response of net exports to a depreciation of the real exchange rate, in which net exports initially decline but then increase |
| Job Finding Rate (8,293) | The probability that someone who is unemployed will find a job in the next month |
| Job Loss Rate (8,293) | The probability that someone who is employed will lose his or her job in the next month |
| Keynesian Approach (1,16) | An approach to macro based on the assumption that wages and prices may not adjust quickly to equate quantities supplied and demanded in each market. Argue that govt intervention may be desirable |
| Labor Hoarding (10,280) | A situation that occurs if, b/c of the costs of firing and hiring workers, firms continue to employ some workers in a recession that they otherwise would have laid off |
| Lagging Variable (8,284) | A variable with peaks and troughs that tend to occur later than the corresponding peaks and troughs in the business cycle |
| Leading Variable (8,284) | A variable with peaks and troughs that tend to occur earlier than the corresponding peaks and troughs of the business cycle |
| Life-Cycle Model (4,158) | A multiperiod version of the basic two-period model of consumer behavior that focuses on the patterns of income, consumption, and saving over the various stages of an individual's life |
| Liquidity Trap (14,552) | A situation in which the nominal interest rate is very close to zero, making it impossible for monetary policymakers to expand the economy through further reductions in the interest rate |
| Long-Run Phillips Curve (12,454) | In a diagram with unemployment on the X-axis and inflation on the y-axis, a vertical line at the natural rate of unemployment; indicates that in the long run the unemployment rate equals the natural rate, independent of the rate of inflation |
| M1 (7,240) | A monetary aggregate that includes currency and travelers' checks held by the public, demand deposits (non-interest-bearing checking accounts), and other checkable deposits |
| M2 (7,241) | A monetary aggregate that includes everything in M1 and a # of other assets that are somewhat less moneylike, such as savings deposits, small-denomination (under $100k) time deposits, noninstitutional holdings of MMMFs, and MMDAs |
| Marginal Propensity to Consume (MPC) (4,107) | The amount by which desired consumption rises when current income rises by one unit |
| Marginal Revenue Product of Labor (MRPN) (3,69) | The extra revenue obtained by a firm when it employs an additional unit of labor and sells the resulting increase in output; for competitive firms, equal to the price of output times the MPN |
| Marginal Tax Rate (15,582) | The fraction of an additional dollar of income that must be paid in taxes |
| Medium of Exchange (7,239) | An asset used in making transactions |
| Monetarism (14,558) | A school of macro thought that emphasizes the importance of monetary factors in the macroeconomy, but which opposes the active use of monetary policy to stabilize the economy |
| Monetary Aggregates (7,240) | The official measures of the money supply, such as M1 and M2 |
| Monetary Policy (1,7) | Policies determining the level and rate of growth of the nation's money supply, which are under the control of a govt institution known as the central bank |
| Money Demand Function (7,254) | The function that relates the real demand for money to output and the interest rate paid by nonmonetary assets |
| Money Multiplier (14,536) | The number of dollars of money supply that can be created from each dollar of the monetary base, calculated as the ratio of the money supply to the monetary base |
| Money Supply / Money Stock (7,241) | The total amount of money available in an economy, consisting of currency held by the nonbank public and deposits |
| Multiple Expansion of Loans and Deposits (14,529) | In a fractional reserve banking system, the process in which banks lend out some of their deposits, the loaned funds are ultimately redeposited in the banking system, and the new deposits are re-lent out; as a res of this process, MS can greatly exceed MB |
| National Income (2,33) | The amnt of inc avail to dist among producers, = to sum of employee comp, proprietors' inc,rental inc of persons, corporate profits,net int,taxes on prod and imps,bus current transfer payments,& current surplus of govt enterprises |
| National Saving (2,38) | The saving of the economy as a whole, including both private saving (business and household) and govt saving |
| National Wealth (2,36) | The total wealth of the residents of a country, consisting of the country's domestic physical assets (such as its stock of capital goods and land) and its net foreign assets |
| Natural Rate of Unemployment (3,91) | The rate of unemployment that exists when the economy's output is at its full-employment level; consists of frictional unemployment and structural unemployment |
| Net Factor Payments from Abroad (NFP) (2,40) | Income paid to domestic factors of production by the rest of the world, minus income paid to foreign factors of production by the domestic economy |
| Net Government Income (2,36) | The part of GDP that is not at the disposal of the private sector. |
| Net Investment (4,161) | The change in the capital stock over the year |
| No-Borrowing, No-Lending Point (4,161) | On the budget line, the point at which the current consumption equals current income plus initial wealth; if the consumer chooses the consumption combination corresponding to this point, he neither borrows nor carries over resources into the future |
| Nominal Appreciation (13,477) | An increase in the nominal exchange rate in a flexible-exchange-rate system |
| Nominal Depreciation (13,476) | A decrease in the nominal exchange rate in a flexible-exchange-rate system |
| Nominal GDP / Current-Dollar GDP (2,42) | The value of an economy's final output measured using current market prices |
| Nominal Interest Rate / Market Interest Rate (2,51) | The rate at which the nominal value of an interest-bearing asset increases over time |
| Nominal Shock (10,362) | A shock to money supply or money demand |
| Nominal Variables (2,41) | Variables measured in terms of current market prices |
| Normative Analysis (1,15) | An analysis of policy that tries to determine whether a certain policy should be used; involves both analysis of the consequences of the policy and value judgments about the desirability of those consequences |
| Official Reserve Assets (5,170) | Assets held by central banks, other than domestic money or securities, that can be used in making international payments; examples are gold, foreign bank deposits, and special assets created by the International Monetary Fund |
| Okun's Law (3,92) | A rule of thumb that says that output falls by 2% for each percentage point increase in the unemployment rate |
| 100% Reserve Banking (14,527) | A banking system in which banks hold reserves equal to 100% of their deposits |
| Open Economy (1,7) | A national economy that has significant trading and financial relationships with other national economies |
| Open-Market Purchase (14,529) | A purchase of assets (such as Treasury securities) from the public by the central bank, used to increase the money supply |
| Open-Market Sale (14,529) | A sale of assets (such as Treasury securities) to the public by the central bank, used to reduce the money supply |
| Overvalued Exchange Rate (13,501) | In a fixed-exchange-rate system, an exchange rate that is higher than its fundamental value |
| Peak (8,275) | In a business cycle, the point in time when economic activity stops increasing and begins to decline |
| Permanent Income Theory (4,157) | A theory that states that consumption depends on the present value of life-time resources, with the implication that consumption responds much less to temporary than to permanent changes in income |
| Persistence (8,277) | The tendency for declines in economic activity to be followed by further declines and for growth in economic activity to be followed by more growth |
| Phillips Curve (12,443) | A downward-sloping relationship b/t the inflation rate and the unemployment rate; theory suggests that this curve will be observed in the data only in periods in which expected inflation and natural rate of unemployment are relatively stable |
| Positive Analysis (1,15) | An analysis of the economic consequences of a policy that doesn't address the question of whether those consequences are desirable |
| Present Value (4,151) | The value of a future payment in terms of today's dollars; equal to the amount of money that must be invested today at a given interest rate to be worth the specified payment at the specified date in the future |
| Present Value of Lifetime Consumption (PVLC) (4,152) | The present value of current and future consumption, which equals PVLR according to the budget constraint |
| Present Value of Lifetime Resources (PVLR) (4,155) | The present value of current and expected future income plus initial wealth; corresponds to the horizontal intercept of the budget line |
| Price Index (2,43) | A measure of the average level of prices for some specified set of goods and services, relative to the prices of a specified base period |
| Primary Government Budget Deficit (15,577) | A measure of the deficit that excludes govt interest payments from total outlays |
| Procyclical (8,284) | Tending to move in the same direction as aggregate economic activity over the business cycle (up in expansions, down in contractions) |
| Product Approach (2,23) | A procedure for measuring econ activity by adding the market values of goods and services produced, excluding any G&S used up in intermediate stages of production; equiv, by summing the value added of all producers |
| Production Function (3,59) | A function that shows the amount of output that can be produced (by a firm or by an entire economy) by using any given quantities of capital and labor |
| Productivity / Total Factor Productivity (3,58) | A measure of the overall effectiveness with which the economy uses capital and labor to produce output |
| Productivity Shock / Supply Shock (10,362) | A change in an economy's prod func; equiv, a change in the amount of output that can be produced using given quantities of capital and labor |
| Purchasing Power Parity (13,477) | The idea that similar foreign and domestic goods, or baskets of goods, should have the same price in terms of the same currency |
| Quantity Theory of Money (7,258) | A theory that asserts that nominal money demand is proportional to nominal GDP so that velocity is constant |
| Real Appreciation (13,477) | An increase in the real exchange rate, which increases the quantity of foreign goods that can be purchased with a given quantity of domestic goods |
| Real Balances (7,254) | The real amount of money held by the public |
| Real Business Cycle (RBC) Theory (10,362) | A version of the classical theory that assumes that productivity shocks are the primary source of cyclical fluctuations |
| Real Depreciation (13,477) | A fall in the real exchange rate, which decreases the quantity of foreign goods that can be purchased with a given quantity of domestic goods |
| Real Exchange Rate / Terms of Trade (13,476) | The quantity of foreign goods that can be obtained in exchange for one domestic good |
| Real GDP / Constant-Dollar GDP (2,42) | The market value of an economy's final output measured in terms of the prices that prevailed during some fixed base period |
| Real Interest Rate (2,51) | The rate at which the real value or purchasing power of an interest-bearing asset increases over time |
| Real Shocks (10,362) | Disturbances to the "real side" of the economy, such as shocks that affect the production function, the size of the labor force, the real quantity of govt purchases, or the spending and saving decisions of consumers; Affect the IS curve or the FE Line |
| Real Variable (2,42) | A variable measured in terms of the prices of a fixed base year; a measure intended to represent physical quantities produced or used |
| Real Wage (3,70) | The real value (measured in terms of goods) of what firms must pay per unit of labor input that they employ |
| Relative Purchasing Power Parity (13,479) | The idea that the rate of appreciation of the nominal exchange rate equals the foreign inflation rate minus the domestic inflation rate |
| Revaluation (13,477) | An increase in the value of a currency by official govt action under a fixed-exchange-rate system |
| Reverse Causation (10,379) | The tendency of expected future changes in output to cause changes in the current money supply in the same direction; used by RBC theorists to explain why the money supply leads the cycle |
| Ricardian Equivalence Proposition (4,117) | The proposition that changes in the govt budget deficit caused entirely by changes in (lump-sum) tax collections have no effect on the economy |
| Rules (14,557) | A set of simple, prespecified, and publicly announced guidelines for conducting monetary policy |
| Small Open Economy (5,178) | An economy that trades with other economies but is too small to affect the world real interest rate |
| Speculative Run (13,503) | A situation in which financial investors, fearing the imminent devaluation of a currency in a fixed-exchange-rate system, rush to sell assets denominated in that currency |
| Stagflation (1,17) | The simultaneous existence of both high unemployment (stagnation) and high inflation, as occurred in the US in the mid-1970s |
| Statistical Discrepancy (2,35;5,173) | The amount that would have to be added to the sum of the current and capital financial account balances for this sum to reach its theoretical value of zero; arises b/c of errors of measurement and incomplete reporting |
| Steady State (6,216) | A situation in which the economy's output per worker, consumption per worker, and capital stock per worker are constant over time |
| Stock Variable (2,40) | An economic quantity that is defined at a specific time; examples are wealth of the money supply |
| Structural Unemployment (3,91) | Long-term and chronic unemployment arising from imbalances b/t the skills and other characteristics of the workers in the market and the needs of employers |
| Substitution Effect of a Higher Real Wage (3,76) | The tendency of workers to substitute work for leisure, and thus supply more labor, in response to an increase in the reward for working when the real wage increases |
| Substitution Effect of the Real Interest Rate on Saving (4,111) | The tendency of consumers to save more, and thereby substitute future compensation for current consumption, in response to a higher reward for saving |
| Supply-Side Economics (15,583) | A school of economic thought based on the premise that all aspects of economic behavior - such as labor supply, saving, and investment - respond strongly to economic incentives, and, in particular, to incentives provided by the tax code |
| Tax-Adjusted User Cost of Capital (4,125) | Indicates how large the before-tax expected future marginal product of capital must be to make a proposed investment profitable |
| Tax Rate Soothing (15,585) | A policy of maintaining stable tax rates over time so as to minimize the distortions created by the tax code |
| Taylor Rule (14,561) | A guideline for monetary policy, it relates the real Fed funds rate to the difference b/t output and full-employment output and the difference b/t inflation and its target |
| Transfers (2,32) | Payments by the govt, excluding payments made in exchange for current goods or services; examples are Social Security and Medicare benefits, unemployment insurance, and welfare payments |
| Trough (8,275) | In a business cycle, the time when economic activity stops falling and begins rising |
| Turning Points (8,276) | Peaks or troughs in the business cycle |
| Underground Economy (2,27) | The portion of the economy that includes both legal activities hidden from govt record keepers and illegal activites |
| Undervalued Exchange Rate (13,504) | In a fixed-exchange-rate system, an exchange rate that is lower than its fundamental value |
| Unilateral Transfers (5,169) | Payments made from one country to another that do not correspond to the purchase of any good, service, or asset; examples are foreign aid and gifts by domestic residents to foreigners |
| User Cost of Capital (4,122) | The expected real cost of using a unit of capital for a specified period of time |
| Uses-of-Saving Identity (2,39) | The accounting identity that states that private saving equals the sum of investment, the govt deficit, and the current account balance |
| Utility (4,152) | An individual's economic satisfaction or well-being |
| Value Added (2,23) | For any producer, the value of output minus the value of purchased inputs |
| Velocity (7,257) | The number of times the money stock "turns over" each period |
| World Real Interest Rate (5,178) | The real interest rate that prevails in the international capital market in which individuals, businesses, and governments borrow and lend across national borders |
Created by:
tcritter28
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