AP MACROECONOMICS VOCABULARY

PART ONE VOCABULARY

CHAPTER 1 1. economics 2. economic perspective 3. marginal analysis 4. scientific method 5. theoretical economics 6. principles 7. generalizations 8. other-things-equal assumption 9. policy economics 10. tradeoffs 11. macroeconomics 12. aggregate 13. microeconomics 14. positive economics 15. normative economics 16. fallacy of composition 17. after this, therefore because of this. Fallacy

CHAPTER 1 APPENDIX

1. horizontal axis 2. vertical axis 3. direct relationship 4. inverse relationship

5. independent variable 6. dependent variable 7. slope of a straight line 8. vertical intercept

CHAPTER 2 1

1. economizing problem 2. utility 3. economic resources 4. land 5. capital 6. investment 7. labor 8. entrepreneurial ability 9. factors of production 10. full employment 11. full production 12. productive efficiency 13. allocative efficiency 14. consumer goods

15. capital goods 16. production possibilities table 17. production possibilities curve 18. opportunity cost 19. law of increasing opportunity costs 20. economic growth 21. economic system 22. market system 23. capitalism 24. command system 25. resource market 26. product market 27. circular flow model

CHAPTER 3 1. Market 2. demand 3. demand schedule 4. law of demand 5. diminishing marginal utility 6. income effect 7. substitution effect 8. demand curve 9. determinants of demand 10. normal goods 11. inferior goods 12. substitute good 13. complementary good 14. change in demand 15. change in quantity demanded 16. supply 17. supply schedule 18. law of supply 19. supply curve 20. determinants of supply 21. change in supply 22. change in quantity supplied 23. surplus 24. shortage 25. equilibrium price 26. equilibrium quantity 27. rationing function of prices

CHAPTER 4 1. 2. 3. 4. 5. 6. 7. private property self-interest competition roundabout production specialization division of labor medium of exchange 8. barter 9. money 10. economic costs 11. normal profit 12. economic profit 13. consumer sovereignty 14. dollar votes

CHAPTER 5 1. durable goods 2. nondurable goods 3. plant 4. firm 5. industry 6. sole proprietorship 7. partnership 8. corporation 9. stocks 10. bonds 11. limited liability 12. double taxation 13. monopoly 14. spillover costs 15. exclusion principle 16. public goods 17. free-rider problem 18. quasi-public goods 19. transfer payments 20. personal income tax 21. corporate income tax 22. sales and excise taxes 23. property taxes 24. fiscal federalism CHAPTER 6 1. multinational corporations 2. comparative advantage 3. terms of trade 4. foreign exchange market 5. exchange rates 6. depreciation 7. appreciation 8. protective tariffs 9. import quotas 10. nontariff barriers 11. export subsidies 12. Smoot-Hawley Tariff Act 13. Reciprocal Trade Agreements Act 14. Most-favored-nation clauses 15. General Agreement on Tariffs and Trade (GATT) 16. World Trade Organization (WTO) 17. European Union (EU) 18. Euro 19. North American Free Trade Agreement (NAFTA)

PART TWO VOCABULARY CHAPTER 7 1. national income accounting 3 2. gross domestic product (GDP)

3. intermediate goods 4. final goods 5. multiple counting 6. value added 7. expenditures approach 8. income approach 9. personal consumption expenditures (C) 10. gross private domestic investment (Ig) 11. net private domestic investment 12. government purchases (G)

13. net exports (Xn) 14. national income 15. indirect business taxes 16. consumption of fixed capital 17. net domestic product (NDP) 18. personal income (PI) 19. disposable income (DI) 20. nominal GDP 21. price index 22. real GDP 23. consumer price index (CPI) 24. per capita output

CHAPTER 8 1. economic growth 2. rule of 70 3. productivity 4. business cycle 5. peak 6. recession 7. trough 8. recovery 9. labor force 10. unemployment rate 11. discouraged workers 12. frictional unemployment 13. structural unemployment 14. cyclical unemployment 4 15. full-employment rate of unemployment 16. natural rate of unemployment (NRU) 17. potential output 18. GDP gap 19. Okuns law 20. inflation 21. demand-pull inflation 22. cost-push inflation 23. per-unit production costs 24. nominal income 25. real income 26. anticipated inflation 27. unanticipated inflation

28. cost-of-living adjustments (COLA) 29. real interest rate 30. nominal interest rate

31. deflation 32. hyperinflation

CHAPTER 9

1.

break-even income

2. average propensity to consume (APC) 3. average propensity to save (APS) 4. marginal propensity to consume (MPC)

5. marginal propensity to save (MPS) 6. wealth effect 7. real interest rate 8. 45 line 9. leakage 10. injection

CHAPTER 10

1. multiplier 2. net exports 3. lump-sum tax

4. balanced budget multiplier 5. recessionary gap 6. inflationary gap

CHAPTER 11

1. aggregate demand-aggregate supply (AD-AS) model 2. aggregate demand 5

3. real-balances effect 4. interest-rate effect

5. foreign purchases effect 6. determinants of aggregate demand 7. aggregate supply 8. horizontal range (of AS curve)

11. determinants of aggregate supply 12. productivity 13. equilibrium price level 14. equilibrium real output 15. efficiency wages

9. intermediate range (of AS curve) 10. vertical range (of AS curve)

16. menu costs

CHAPTER 12

1. fiscal policy 2. Employment Act of 1946 3. Council of Economic Advisers (CEA) 4. expansionary fiscal policy 5. budget deficit 6. contractionary fiscal policy 7. budget surplus 8. built-in stabilizer

9. progressive tax system 10. proportional tax system 11. full-employment budget 12. cyclical deficit 13. political business cycle 14. crowding-out effect 15. net export effect 16. supply-side fiscal policy

PART THREE VOCABULARY

CHAPTER 13

1. medium of exchange 2. unit of account 6

3. store of value 4. M1, M2, M3

5. token money 6. Federal Reserve Notes 7. checkable deposits 8. commercial banks 9. thrift institutions 10. near-monies 11. savings account 12. money market deposit account (MMDA) 13. time deposits 14. money market mutual fund (MMMF)

15. legal tender 16. transactions demand 17. asset demand 18. total demand for money 19. money market 20. Federal Reserve System 21. Board of Governors 22. Federal Open Market Committee (FOMC) 23. Federal Reserve Banks 24. electronic transactions

CHAPTER 14 1. balance sheet 2. fractional reserve system 3. vault cash 4. required reserve 5. reserve ratio 6. excess reserves 7. actual reserves 8. Federal funds rate 9. monetary multiplier

CHAPTER 15 1. monetary policy 2. open-market operations 3. reserve ratio 4. discount rate 5. easy money 6. tight money 7. velocity of money 8. cyclical asymmetry 9. Federal funds rate 10. prime interest rate

AP MACROECONOMICS CHAPTER 16 1. short run 2. long run 3. short-run aggregate supply curve 4. long-run aggregate supply curve 5. Phillips Curve 6. stagflation 7. aggregate supply shocks 8. long-run vertical Phillips Curve 9. disinflation 10. supply-side economics 11. Lafer Curve

CHAPTER 18 1. public debt 2. U.S. securities 3. annually balanced budget 4. cyclically balanced budget 5. functional finance 6. social security trust fund 7. external public debt 8. public investments

PART NINE VOCABULARY CHAPTER 37 1. principle of comparative advantage 2. terms of trade 3. gains from trade 4. world price 5. equilibrium world price 6. tariffs 7. nontariff barrier (NTB) 8. dumping 9. World Trade Organization (WTO)

CHAPTER 38 1. balance of payments 2. current account 8 3. trade deficit 4. trade surplus

5. balance on current account 6. capital account 7. official reserves 8. flexible- or floating- exchange-rate system 9. fixed exchange-rate system

10. purchasing-power-parity theory 11. gold standard 12. devaluation 13. Breton Woods system 14. International Monetary Fund (IMF)