Macroeconomics Vocabulary

gross domestic product; the total value of goods and services produced

“GDP growth of 3% indicates a healthy economy.”

a general increase in prices and fall in purchasing power

“Inflation eroded the value of savings.”

a general decrease in prices

“Japan experienced deflation in the 1990s.”

a significant decline in economic activity lasting months

“The recession caused unemployment to spike.”

government spending and taxation decisions

“Expansionary fiscal policy increased the deficit.”

central bank actions affecting money supply and interest rates

“The Fed tightened monetary policy to fight inflation.”

total demand for goods and services in an economy

“Stimulus checks boosted aggregate demand.”

the amplified impact of spending through successive rounds

“Government spending has a multiplier effect on GDP.”

stagnant growth combined with high inflation

“The 1970s oil crisis caused stagflation.”

when imports exceed exports

“The trade deficit widened as imports surged.”