暨南大学宏观经济学名词解释 全英 范兆斌

Definition of Terms

Chapter 1

Microeconomics: The study of individual markets and decisionmakers.

Chapter 2

Gross domestic product (GDP): The total income earned domestically, including the income earned by foreign-owned factors of production; the total expenditure on domestically produced goods and services.

Value added:The value of a firm’s output minus the value of the intermediate goods the firm purchased.

Real GDP :measures the total income of everyone in the economy

GDP deflator: The ratio of nominal GDP to real GDP; a measure of the overall level of prices that shows the cost of the currently produced basket of goods relative to the cost of that basket in a base year.

Consumer price index (CPI): A measure of the overall level of prices that shows the cost of a fixed basket of consumer goods relative to the cost of the same basket in a base year.

Unemployment rate: The percentage of those in the labor force who do not have jobs.

Labor-force participation rate: The percentage of the adult population in the labor force. Chapter 3

Disposable income: Income remaining after the payment of taxes.

Marginal propensity to consume(MPC): Then increase in consumption resulting from a one-dollar increase in disposable income.

Real interest rate: The return to saving and the cost of borrowing after adjustment for inflation. Chapter 4

Inflation: An increase in the overall level of prices

Hyperinflation: Extremely high inflation.

Money: The stock of assets used for transactions.

Fiat mone y: Money that is not intrinsically useful and is valued only because it is used as money. Commodity money: Money that is intrinsically useful and would be valued even if it did not serve as money.

Money supply: The quantity of money available in an economy.

Quantity equation: The identity stating that the product of the money supply and the velocity of money equals nominal expenditure (MV = PY );coupled with the assumption of stable velocity, an explanation of nominal expenditure called the quantity theory of money.

Income velocity of money:the number of times a dollar bill enters someone’s income in a given period of time

Real money balances:The quantity of money expressed in terms of the quantity of goods and services it can buy; the quantity of money divided by the price level (M/P)

Seigniorage: The revenue raised by the government through the creation of money; also called the inflation tax.

Fisher equation: The equation stating that the nominal interest rate is the sum of the real interest rate and expected inflation (i = r + Eπ)

Fisher effect：The one-for-one influence of expected inflation on the nominal interest rate. Shoeleather cost：The cost of inflation from reducing real money balances, such as the inconvenience of needing to make more frequent trips to the bank.

Menu costs: The cost of changing a price.

Classical dichotomy: The theoretical separation of real and nominal variables in the classical model, which implies that nominal variables do not influence real variables.Monetary neutrality

Chapter 6

Natural rate of unemployment: The steady-state rate of unemployment; the rate of unemployment toward which the economy gravitates in the long run.

Frictional unemployment: The unemployment that results because it takes time for workers to search for the jobs that best suit their skills and tastes.

Wage rigidity: The failure of wages to adjust to equilibrate labor supply and labor demand. Structural unemployment: The unemployment resulting from wage rigidity and job rationing. Efficiency wages

Efficiency-wage theories:Theories of real-wage rigidity and unemployment according to which firms raise labor productivity and profits by keeping real wages above the equilibrium level. Chapter 7

Steady state: A condition in which key variables are not changing.

Golden Rule level of capital: The steady-state value of k that maximizes consumption.

Golden rule: The saving rate in the Solow growth model that leads to the steady state in which consumption per worker (or consumption per efficiency unit of labor) is maximized.

Chapter 8

Endogenous growth theory:Models of economic growth that try to explain the rate of technological change.

Chapter 9

Okun’s law: The negative relationship between unemployment and real GDP, according to which a decrease in unemployment of 1 percentage point isassociated with additional growth in real GDP of approximately 2 percent.

Aggregate demand: the relationship between the quantity of output demanded and the aggregate price level.

Aggregate supply: the relationship between the quantity of goodsand services supplied and the price level

Demand shocks: Exogenous events that shift the aggregate demand curve.

Supply shocks: Exogenous events that shift the aggregate supply curve.

Stabilization policy: Stabilization policy: Public policy aimed at reducing the severity of short-run economic fluctuations

Chapter 10

IS curve: The negative relationship between the interest rate and the level of income that arises in the market for goods and services

LM curve: The positive relationship between the interest rate and the level of income (while holding the price level fixed) that arises in the market for real money balances.

Keynesian cross: A simple model of income determination, based on the ideas in Keynes’s General Theory, which shows how changes in spending can have a multiplied effect on aggregate income. Chapter 13

Phillips curve: A negative relationship between inflation and unemployment; in its modern form, a relationship among inflation, cyclical unemployment, expected inflation, and supply shocks, derived from the short-run aggregate supply curve.

Adaptive expectations: An approach that assumes that people form their expectation of a variable based on recently observed values of the variable.

Demand-pull inflation: Inflation resulting from shocks to aggregate demand.

Cost-push inflation: Inflation resulting from shocks to aggregate supply.

Sacrifice ratio: The number of percentage points of a year’s real GDP that must be forgone to reduce inflation by 1 percentage point.

Rational expectations: An approach that assumes that people optimally use all available information—including information about current and prospective policies—to forecast the future. Natural-rate hypothesis: The premise that fluctuations in aggregate demand influence output, employment, and unemployment only in the short run, and that in the long run these variables return to the levels implied by the classical model.

Hysteresis: The long-lasting influence of history,such as on the natural rate of unemployment.