| A | B |
|---|
| Aggregate Demand | The amount of goods and services in the economy that will be purchased at all possible price levels. |
| Aggregate Supply | The total amount of goods and services in the economy available at all possible price levels. |
| Business Cycle | Alternating periods of economic expansion and recession. |
| Consumer Price Index (CPI) | Monthly statistics that measure the pace of inflation or deflation--current value of the market basket divided by the value of the market basket in the base year times 100. |
| Cyclical Unemployment | Rises during economic downturns and falls when the economy improves. |
| Discount Rate | The minimum interest rate charged by the Federal Reserve when it lends to other banks. |
| Federal Reserve System | The U.S.'s central bank that regulates the money supply and interest rates. |
| Fiat Money | Official money used by a government |
| Fiscal Policy | Legislation that changes the levels of taxation and/or government spending to stabilize the economy. |
| Frictional Unemployment | Occurs when people take time to find a job. |
| Full Employment | The condition in which virtually all who are able and willing to work are employed. The unemployment rate is between 4% and 6%. |
| Gross Domestic Product (GDP) | A measurement of the total goods and services produced within a country. |
| Inflation | An increase in prices and a fall in the purchasing value of money. |
| Interest on Reserves | The central bank's policy of paying banks an interest rate for the deposits that they hold as reserves. |
| Macroeconomics | The study of the economy as a whole, including inflation, unemployment, and economic growth |
| Market Basket | A representative collection of goods and services |
| Medium of Exchange | Any item sellers generally accept and buyers generally use to pay for a good or service. |
| Monetary Policy | Federal Reserve's actions to achieve maximum employment, price stability, and moderate long-term interest rates. |
| National Debt | The amount of money a national government owes |
| Open Market Operations | Buying and selling government securities to change the supply of money |
| Output Expenditure Model | Value of a country's exports minus value of a country's imports in a given time. |
| Price Stability | No sudden increase or decrease in the overall price of goods |
| Real GDP | GDP adjusted for inflation-value of output expenditure model divided by CPI (or another price index number) times 100. |
| Reserve Requirement | The percentage of deposits that banking institutions must hold in reserve |
| Seasonal Unemployment | Occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season. |
| Steady Economic Growth | An economy with stable or mildly fluctuating size |
| Store of Value | The belief that money saved today will hold its purchasing value in the future. |
| Structural Unemployment | Occurs when workers' skills do not match the jobs that are available. |
| Unemployment Rate | Number of unemployed people in a country divided by number of people in the labor force times 100. |
| Unit of Account | Acts as a common standard for comparing the values of goods and services—the dollar in the U.S. |
