AP Macroeconomic Vocabulary

the quantity demanded exceeds the quantity supplied

payments the government makes to individuals without expecting a good or service in return.

a good or service used to produce another good or service.

when you give up something in order to have something else.

goods which a rise in the price of one leads to an increase in the demand for the other good.

when the point of short-run macroeconomic equilibrium is on the LRAS curve.

an institution that transforms funds it gathers from many individuals into financial assets.

alternation between economic recessions, and economic upturns, known as expansions

level of real GDP economy would produce if all prices, nominal wages, were fully flexible.

maximum price sellers are allowed to charge for a good or service

the opportunity cost of producing the good is lower for that individual than for other people.

a good for which a rise in income decreases the demand for the good.

an upper limit on the quantity of some good that can be bought or sold.

each person specializes in the task that he or she is good at performing.

quantity supplied exceeds the quantity demanded

all resources that come from nature, such as minerals, timber and petroleum.

the economy’s total production of goods and services for a given time period.

the number of people currently employed in the economy.

fiscal policy that is the result of deliberate actions by policy makers rather than rules.

the study of scarcity and choice.

minimum price buyers are required to pay for a good or service.

The branch of economic analysis that describes the way the economy actually works.

a paper claim that entitles the buyer to future income from the seller.

shocks to aggregate demand affect aggregate output in the short run, but not the long run.

use of taxes, government transfers, or government purchases of goods to stabilize economy.

the total value of all final goods and services produced in the economy during a given year.

combination of inflation and stagnating (or falling) aggregate output.

programs are government programs intended to protect families against economic hardship

the actual amount of a good or service consumers are willing to buy at some specific price.

legal restrictions on how high or low a market price may go