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What happens when the macroeconomy is doing well?

Jobs are easy to find and incomes are rising.

What defines microeconomics?

Focuses on individual industries and decision-making units.

How does macroeconomics differ from microeconomics?

Studies national output rather than individual income.

What is aggregate in economics?

The total of individual economic units combined.

What do microeconomists generally conclude about markets?

They work well with flexible prices.

What are sticky prices?

Prices that do not adjust quickly to market changes.

What are the major concerns of macroeconomics?

Output growth, unemployment, and inflation.

What is a recession?

A decline in aggregate output for two consecutive quarters.

What characterizes a depression?

A prolonged and deep recession.

What occurs during an expansion in the business cycle?

Output and employment grow.

What does the unemployment rate indicate?

The percentage of the labor force that is unemployed.

What is considered a normal unemployment rate?

Around 4%-5%.

What is inflation?

An increase in the overall price level.

What is deflation?

A decrease in the overall price level.

What are transfer payments?

Cash payments made by the government without exchange for goods or services.

What role do households play in the economy?

They receive income, purchase goods, and pay taxes.

What do firms do in the economy?

Receive payments for goods and services and pay wages.

What is the government's role in the economy?

Receives taxes and pays for goods and services.

What does the rest of the world contribute to the economy?

Purchases domestic goods and services (exports).

What are the three market arenas?

Goods-and-services, labor, and money markets.

What defines the goods-and-services market?

Firms supply goods while households and government demand them.

What is the role of households in the labor market?

Households supply labor to firms and government.

How does the money market function?

Households supply funds expecting income from investments.

What are treasury bonds?

Promissory notes issued by the federal government.

What distinguishes corporate bonds from treasury bonds?

Corporate bonds are issued by firms, not the government.

What are shares of stock?

Financial instruments representing ownership in a firm.

What are dividends?

Portion of profits paid out to shareholders.

What is fiscal policy?

Government policies regarding taxes and spending.

What is monetary policy?

Central Bank tools to control money supply and interest rates.

Who is John Maynard Keynes?

Economist known for his influence on modern macroeconomics.

What was the Great Depression?

A severe economic downturn starting in 1929.

What does fine-tuning refer to?

Government's role in managing inflation and unemployment.

What is stagflation?

A situation of high inflation combined with high unemployment.