Macroeconomics Vocabulary

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

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

Origin: Acronym: Gross Domestic Product, coined mid-20th century

a general increase in prices and fall in purchasing power

“Inflation eroded the value of savings.”

Origin: Latin inflatio `a blowing up`, from inflare `to blow into`

a general decrease in prices

“Japan experienced deflation in the 1990s.”

Origin: From de- `down` + inflation

a significant decline in economic activity lasting months

“The recession caused unemployment to spike.”

Origin: Latin recessio `a going back`, from recedere `to go back`

government spending and taxation decisions

“Expansionary fiscal policy increased the deficit.”

Origin: Latin fiscalis `of the treasury`, from fiscus `basket, treasury`

central bank actions affecting money supply and interest rates

“The Fed tightened monetary policy to fight inflation.”

Origin: Latin monetarius `of a mint`, from moneta `mint, money`

total demand for goods and services in an economy

“Stimulus checks boosted aggregate demand.”

Origin: Latin aggregare `to add to` + demand

the amplified impact of spending through successive rounds

“Government spending has a multiplier effect on GDP.”

Origin: From multiply (Latin multiplicare) + effect

stagnant growth combined with high inflation

“The 1970s oil crisis caused stagflation.”

Origin: Blend of stagnation + inflation, coined 1965

when imports exceed exports

“The trade deficit widened as imports surged.”

Origin: From trade + deficit (Latin deficere `to fail, be lacking`)