Brielle A. McCray
Ms. White
Fundamental Concepts
Definitions
1. Micro to Macro- is a branch of economics that deals with the performance, structure, behavior and decision-making of the entire economy, be that a national, regional, or the global economy.
2. Aggregation- used in corporate financial planning, aggregation is a process whereby a number of a firm’s smaller projects are combined and treated as an individual project.
3. Gross domestic product (GDP) - is a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living.
4. Multiplier Effect- The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves.
5. Aggregate Demand- The total amount of goods and services demanded in the economy at a given overall price level and in a given time period. It is represented by the aggregate-demand curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide.
6. Aggregate Supply- Having looked at the components of aggregate demand; we now turn to the supply-side of the economy. Aggregate supply tells us something about whether producers across the economy can supply us with the goods and services that we need.
7. Production Possibilities Frontier- graph that shows the different rates of production of two goods and/or services that an economy can produce efficiently during a specified period of time with a limited quantity of productive resources, or factors of production.
8. Indicators- Economic indicators allow analysis of economic performance and predictions of future performance.
9. Expectations- a hypothesis in economics which states those agents' predictions of the future value of economically relevant variables.
10. Money Supply- is the total amount of money available in an economy at a particular point in time.
11. Monetary Policy- the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.
12. Fiscal Policy- Measures employed by governments to stabilize the economy, specifically by adjusting the levels and allocations of taxes and government expenditures.