Macroeconomic terms - 4408 Words

Macroeconomic Terms Describe the following terms in your words. Term Definition Gross Domestic Product (GDP) The value of all of the goods and services of a nation in a year. Real GDP The value of all of the goods and services based on inflation of a nation in a year. Nominal GDP Market value of all goods and services of a nation in a year, not based on inflation. Unemployment rate The number of all of the unemployed by the number of people in the workforce. Inflation rate The rate that the prices of goods and services are rising. Fiscal Policy The governmental policies which adjust spending. Monetary Policy The governmental policies that help to control the economy. This is done by adjusting the†¦show more content†¦Ã®  Ã® â€šÃ®â‚¬â€™ The aggregate demand curve slopes downward because of the Real-balance, interest rate and open economy effects î  Ã® â€šÃ®â‚¬â€™ According to the real-balance effect, an increase in the price level Reduces an individual s expenditures due to a decrease in the real value of cash balances î  Ã® â€šÃ®â‚¬â€™ According to the interest rate effect, an increase in the price level Increases î â€šÃ®â‚¬â€™ The relationship between the MPC and the MPS indicates that the entire increase in household disposable income is distributed between consumption and saving. î  Ã® â€šÃ®â‚¬â€™ Planned real investment is determined by the rate of interest î  Ã® â€šÃ®â‚¬â€™ What won t cause the planned investment function to shift rightward? A decrease in the interest rate î  Ã® â€šÃ®â‚¬â€™ An increase in the interest rate causes a decrease in the amount of real planned investment î  Ã® â€šÃ®â‚¬â€™ In the Keynesian model equilibrium national income equals planned consumption, investment, government, and net export expenditures î  Ã® â€šÃ®â‚¬â€™ If real GDP falls below total planned expenditures the economy willShow MoreRelatedMacroeconomics Term Paper : Keynesian Economics999 Words   |  4 PagesMacroeconomics Term Paper: Keynesian Economics John Maynard Keynes: A famous economist John Maynard Keynes once said â€Å"by a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizen† (Brainy, n.d., p.1). Keynes had studied in an economics and finance program, and he searched for a solution as he felt that a depression in our economy may be rising. 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