Unit 5: Macroeconomics Vocabulary Quiz

The lowest point in the business cycle, marking the end of a contraction and the beginning of an expansion.

The phase of the business cycle where economic activity is increasing, leading to growth and higher employment.

A significant decline in economic activity, typically lasting for a few months, marked by decreased GDP, increased unemployment, and reduced consumer spending.

The highest point in the business cycle when economic activity is at its maximum.

The phase of the business cycle characterized by a decline in economic activity.

Unemployment caused by fluctuations in demand for labor based on seasonal factors, such as weather or holidays.

The percentage of the labor force that is unemployed and actively seeking employment.

Unemployment that occurs due to economic downturns or contractions in the business cycle.

Unemployment resulting from a mismatch between the skills of the labor force and the requirements of available jobs.

Temporary unemployment that occurs when individuals are between jobs or searching for new employment opportunities

A measure that examines the average change in prices paid by consumers for a basket of goods and services over time.

The percentage increase in the general price level of goods and services over a specific period, as measured by the CPI.

The total value of all goods and services produced within a country's borders in a specific time period.

The recurring pattern of economic growth and contraction in a market economy.

GDP adjusted for inflation or deflation, providing a more accurate measure of economic growth.

The monetary policymaking body of the Federal Reserve System. It is responsible for overseeing the open market operations, which involve buying and selling government securities to influence the money supply and achieve the Federal Reserve's monetary policy goals, including price stability and full employment.

The interest rate at which depository institutions (banks) lend reserve balances to each other overnight. It is a key monetary policy tool used by the Federal Reserve to influence the overall interest rates in the economy. Changes in the federal funds rate can impact borrowing costs, investment, and overall economic activity.

The regional divisions that help the Federal Reserve System carry out its functions, including implementing monetary policy and providing banking services.

The central banking system of the United States. It was established to provide the country with a safe, flexible, and stable monetary and financial system. The Fed conducts monetary policy, supervises and regulates banks, and provides financial services.

The main governing body of the Federal Reserve System. It consists of seven members who are appointed by the President of the United States and confirmed by the Senate. They play a key role in setting monetary policy and supervising and regulating banks.

A tax imposed on an individual's or entity's income, including wages, salaries, profits, interest, dividends, and other sources of earnings. It is a common form of taxation used by governments to generate revenue and is often progressive, with higher-income individuals paying a higher percentage of their income in taxes.

A tax in which the rate remains constant regardless of the taxpayer's income or financial situation. Everyone, regardless of their income level, pays the same percentage of their income in taxes.

A tax system in which the tax rate decreases as the taxable amount increases. This means that individuals with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes.

• A tax imposed on the profit from the sale of an asset, known as a capital gain. This typically applies to investments such as stocks, bonds, real estate, and other assets. The tax is usually based on the difference between the purchase price and the selling price of the asset.

A tax system in which the tax rate increases as the taxable amount (income or wealth) increases. Individuals with higher incomes pay a higher percentage of their income in taxes, while those with lower incomes pay a lower percentage.

Involves the control and regulation of the money supply by a central bank to achieve economic objectives. This includes influencing interest rates, credit availability, and the overall financial conditions to maintain price stability and support sustainable economic growth. Central banks, like the Federal Reserve, typically implement this.

The total amount of money that a government owes to external creditors and internal bondholders. It accumulates over time as a result of budget deficits, where the government borrows to cover its expenses.

The use of government spending and taxation to influence the economy. Governments use this to achieve specific economic goals, such as promoting price stability, full employment, and economic growth.

Occurs when a government's total revenue exceeds its expenditures during a specific period. In other words, it indicates that the government has more income than it spends.

Occurs when a government's total expenditures exceed its revenue during a specific period. This implies that the government is spending more money than it is taking in.

A standard numerical unit used to measure and compare the value of different goods and services. It provides a consistent measure for expressing prices and helps in comparing the relative value of various items in an economy.

The cost of borrowing money or the return on investment for lending or saving. It is usually expressed as a percentage and represents the compensation paid by borrowers to lenders or the reward for saving.

An asset or form of wealth that maintains its value over time. It allows individuals to transfer purchasing power from the present to the future. In other words, it can be saved or stored for future use, and its value is expected to remain relatively stable.

An intermediary instrument or system used to facilitate the sale, purchase, or trade of goods and services. It is a widely accepted form of currency or financial instrument that individuals can use to conduct transactions.

A medium of exchange that is widely accepted in transactions involving goods, services, or the settlement of debts. It serves as a unit of account and a store of value.