AP MACROECONOMICS VOCABULARY

PART ONE VOCABULARY

CHAPTER 1

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  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

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CHAPTER 1 APPENDIX

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  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

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CHAPTER 2

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  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

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CHAPTER 3

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  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
  1. change in quantity demanded
  2. supply
  3. supply schedule
  4. law of supply
  5. supply curve
  6. determinants of supply
  7. change in supply
  8. change in quantity supplied
  9. surplus
  10. shortage
  11. equilibrium price
  12. equilibrium quantity
  13. rationing function of prices

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CHAPTER 4

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

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CHAPTER 5

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  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

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CHAPTER 6

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  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)

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PART TWO VOCABULARY

CHAPTER 7

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  1. national income accounting
  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

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CHAPTER 8

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  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
  15. full-employment rate of unemployment
  16. natural rate of unemployment (NRU)
  17. potential output
  18. GDP gap
  19. Okun’s 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

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CHAPTER 9

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  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. 45º line
  9. leakage
  10. injection

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CHAPTER 10

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  1. multiplier
  2. net exports
  3. lump-sum tax
  4. balanced budget multiplier
  5. recessionary gap
  6. inflationary gap

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CHAPTER 11

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  1. aggregate demand-aggregate supply (AD-AS) model
  2. aggregate demand
  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)
  1. intermediate range (of AS curve)
  2. vertical range (of AS curve)
  3. determinants of aggregate supply
  4. productivity
  5. equilibrium price level
  6. equilibrium real output
  7. efficiency wages
  8. menu costs

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CHAPTER 12

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  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

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PART THREE VOCABULARY

CHAPTER 13

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  1. medium of exchange
  2. unit of account
  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

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CHAPTER 14

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  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

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CHAPTER 15

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  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

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AP MACROECONOMICS

CHAPTER 16

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  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

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CHAPTER 18

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  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

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PART NINE VOCABULARY

CHAPTER 37

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  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)

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CHAPTER 38

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  1. balance of payments
  2. current account
  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)

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