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Shift in a demand curve A shift in a placed by automation, because their skills
mon examples are Social Security and
demand curve occurs when any rele- are no longer in demand, or because of
unemployment benefits. (pp. 35, 157)
vant variable other than price changes. similar reasons. (p. 114)
If consumers want to buy more at any Unemployment insurance Unemploy-
Supply curve A supply curve is a graphi-
and all given prices than they wanted ment insurance is a government program
cal depiction of a supply schedule. It
previously, the demand curve shifts to that replaces some of the wages lost by el-
shows how the quantity supplied of some
the right (or outward). If they desire igible workers who lose their jobs. (p. 116)
product will change as the price of that
less at any given price, the demand
product changes during a specified period Unemployment rate The unemployment
curve shifts to the left (or inward).
of time, holding all other determinants of rate is the number of unemployed people,
(p. 59)
quantity supplied constant. (p. 62) expressed as a percentage of the labor
Shortage A shortage is an excess of force. (p. 111)
Supply-demand diagram A supply-demand
quantity demanded over quantity sup-
diagram graphs the supply and demand Unit of account The unit of account is the
plied. When there is a shortage, buyers
curves together. It also determines the standard unit for quoting prices. (p. 244)
cannot purchase the quantities they de-
equilibrium price and quantity. (p. 64)
sire at the current price. (p. 65)
Value added The value added by a firm
Supply schedule A supply schedule is is its revenue from selling a product
Slope of a curved line The slope of a
a table showing how the quantity sup- minus the amount paid for goods and
curved line at a particular point is de-
plied of some product changes as the services purchased from other firms.
fined as the slope of the straight line that
price of that product changes during a (p. 171)
is tangent to the curve at that point.
specified period of time, holding all
(p. 15)
Variable A variable is something meas-
other determinants of quantity supplied
ured by a number; it is used to analyze
Slope of a straight line The slope of a constant. (p. 61)
what happens to other things when the
straight line is the ratio of the vertical
size of that number changes (varies).
Supply-side inflation Supply-side infla-
change to the corresponding horizontal
(p. 13)
tion is a rise in the price level caused by
change as we move to the right along the



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Glossary 411



Y-intercept The Y-intercept of a line or a
Variable taxes Variable taxes are taxes Vertical (long-run) Phillips curve The
that vary with the level of GDP. (p. 235) vertical (long-run) Phillips curve shows curve is the point at which it touches the
vertical axis (the Y-axis). The X-intercept
the menu of inflation/unemployment
Velocity Velocity indicates the number choices available to society in the long is defined similarly. (p. 16)
of times per year that an “average dollar” run. It is a vertical straight line at the nat-
is spent on goods and services. It is the ural rate of unemployment. (p. 323)
ratio of nominal gross domestic product
(GDP) to the number of dollars in the
money stock. That is:
Nominal GDP
Velocity 5 (p. 278)
Money stock




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Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:




Index

Appreciate (currency), 362. see also reduction, international aspects of,
458 line, 17, 179, 183, 185
386“388
Exchange rates
458 line diagram, 179“180, 181
Argentina, 361, 369, 372, 373, 374 in short run, 300“301
A Asset, 251“252 size of, 300, 312“313
Australia, 26, 363 structural, 305“306
Absolute advantage, 343, 345
Automatic stabilizers, 225 supply-side economics, 231
Abstraction, 7“9, 84
trade deficit link, 387“388
Autonomous increase in consumption,
Africa, 138, 140, 149
188, 191 U.S. budget, 40, 46
African Americans, 113
Auxiliary restrictions, 75 Budget surplus
Aggregate demand. see also Aggregate
in 1990s, 40
demand curve
B definition, 303
2008 presidential campaign, 222
interpretation of, 305“307
Balance of payments deficit, 369“370, 372
balanced with aggregate supply,
in long run, 301“303
Balance of payments surplus, 369“370
300“301
on-budget vs. off-budget, 307
Balance sheet, 252
composition of, 302
quickly turned to deficit, 314
Balanced budget, 307. see also Budget
equilibrium of, 203“204
in short run, 300“301
deficit
excess of, 210
structural, 305“307
Bank of England, 293
and exchange rates, 380“383
Bureau of Labor Statistics, 113“114
Bank reserves market, 216, 265“266
fiscal policy. see Fiscal policy
Burundi, 138
Banking system
fluctuations in, 213“214
Bush, George H.W., 25, 34, 40, 93, 97, 232
central banks, 263“265
gross domestic product and national
Bush, George W.
discretion over money supply,
income, 153“155
Bernanke appointment, 263
248“249
growth, 302, 318
budget deficits, 40, 46
European Union, 264
international trade, 380“382
business regulation, 34
examinations, 250
macroeconomic policy, 105“106
capital gains tax, 139
Great Depression, 258
and monetary policy, 272, 301
economic growth, 93
history of, 248“249
predictability of, 166
fiscal policy, 228
management principles, 250
and unemployment, 99“100
No Child Left Behind, 141
money creation, 252“258
Aggregate demand curve
spending surge, 313
panics, 263
definition, 86
supply-side economics, 229“233
profitability, 248
demand-side equilibrium, 180“182
tax cuts, 98“99, 222, 226, 228, 292“293,
regulation of, 242, 250“251
and economic fluctuations, 319
300, 305, 313
run on a bank, 242, 249
effect on real GDP and prices, 200, 228
tax rebates, 154, 163“164
supervision, 250
and inflation, 204“205
tax share under, 35
U.S. bank failures, 243
in Keynesian model, 273“274
Business and professional services, 28
of various nations, 265
and multiplier, 190“191
Business confidence, 165
Barter, 243“244
Aggregate supply. see also Aggregate
Business cycles, 24“25, 190, 293“294, 380.
Bastiat, Fr©d©ric, 355
supply curve
see also Booms; Recession
Belarus, 138
2008 presidential campaign, 222
Business firms
Benchmark Company LLC, The, 68
balanced with aggregate demand,
price advantage for, 350
Bernanke, Ben, 262, 263, 317
300“301
role of, 31“32
Big Macs, and purchasing power parity
equilibrium of, 203“204
theory, 368
and exchange rates, 382
C
Black market, 71
fluctuations in, 200, 214“215
Boeing Corporation, 349 Canada
and growth, 302
Bonds, 162, 268, 269 currency, 362, 363
macroeconomic policy, 105
Booms, 190, 380. see also Business cycles educational attainment in, 148
and monetary policy, 273
BP Plc, 68“69 GDP of, 22
in open economy, 382
Brazil, 140, 148, 265, 361, 373, 374 investor protection, 140
Aggregate supply curve
Bretton Woods system, 371 labor costs, 341
definition, 86
Browne, John, 69 openness of economy, 24
and exchange rates, 382
taxes in, 35
Budget deficit
and inflation, 204“205, 273
and automatic stabilizers, 225 trade with U.S., 345
shape of, 287“289
and Clinton, 40, 97“98 unemployment, 26, 113
shifts in, 201“203
and debt, 303“305 Capital
and supply shock, 321“322
definition, 303 in developing countries, 147
upward slope, 200“201
economics of, 314 earnings of, 30
vertical, 326“328
and Federal Reserve System, 386“387 formation of, 138“140, 142
Aggregate supply-demand model, 87,
future prospects, 314 human, 136
212“216, 229“230
and inflation, 308“310 international flows, 384“386
Aggregation, 84“85
interpretation of, 305“307 mobility impediments, 342“343
AIDS epidemic, 149
in long run, 301“303 and productivity growth, 135
Airbus, 349
monetization, 309“310 supply of, 202“203
Allocation of resources, 47“49
official deficit, 306 Capital account, 370
“American exceptionalism,” 362
politics of, 314 Capital account plus, 385
Anticounterfeiting features of money, 245
and recession, 314 Capital account surplus, 376
Antitrust laws, 33“34

413

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Licensed to:
Index
414



Consumption schedule, 222“223, 235 Dirty float, 374
Capital formation, 138“140, 142
Contour maps, 17“18 Discount rate, 270
Capital gains, 122, 230
Convergence hypothesis, 136“138 Discouraged workers, 114
Capital gains tax, 139
Discrimination. see Economic
Coolidge, Calvin, 31, 105
Capra, Frank, 249
Coordination failure, 184“185
Card, David, 115 discrimination

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