Test Bank for Modern Principles of
Macroeconomics, 26th Edition
natural rate of unemployment - answers the normal rate of unemployment around which
the unemployment rate fluctuates
cyclical unemployment - answers the deviation of unemployment from its natural rate
frictional unemployment - answers unemployment that results because it takes time for
workers to search for the jobs that best suit their tastes and skills
structural unemployment - answers unemployment that results because the number of
jobs available in some labor markets is insufficient to provide for everyone who wants
one
job search - answers the process by which workers find appropriate jobs given their
tastes and skills
unemployment insurance - answers a government program that partially protects
workers' incomes when they become unemployed
union - answers a worker association that bargains with employers over wages,
benefits, and working conditions
collective bargaining - answers the process by which unions and firms agree on the
terms of employment
strike - answers the organized withdrawal of labor from a firm by a union
efficiency wages - answers above-equilibrium wages paid by firms to increase worker
productivity
sectoral shift - answers changes in the composition of demand among industries or
regions
seasonal unemployment - answers an elevated level of unemployment that is expected
to occur at certain times of the year because it is relatively regular and moderately
predictable
productivity - answers the quantity of goods and services produced from each unit of
output or for each hour of a worker's time
physical capital - answers the stock of equipment and structures used that are used to
produce goods and services
,human capital - answers the knowledge and skills that workers acquire through
education, training, and experience
natural resources - answers the inputs into the goods and services that are provided by
nature, such as land, rivers, and mineral deposits
technological knowledge - answers society's understanding of the best ways to produce
goods and services
diminishing returns - answers the property whereby the benefit from an extra unit of an
input declines as the quantity of the input increases
catch-up effect - answers the property whereby countries that start off poor tend to grow
more rapidly than countries that start off rich
brain drain - answers the emigration of many of the most highly educated workers to
rich countries, where these workers can enjoy a higher standard of living
property rights - answers the ability of people to exercise authority over the resources
they own
foreign direct investment - answers capital investment that is owned and operated by a
foreign entity
foreign portfolio investment - answers investment that is financed with foreign money
but is operated by domestic residents
real GDP per person - answers real GDP divided by population; the "average" output of
the economy per person measured in a base year prices; often used as a measure of
standard of living in comparisons over time of one country or between different
countries when measured in the same currency
rule of 70 - answers if a variable grows at a rate of x percent per year, then that variable
doubles in approximately 70/x years
financial system - answers the group of institutions in the economy that help to match
one person's saving with another person's investment
financial markets - answers financial institutions through which savers can directly
provide funds to borrows
bond - answers a certificate of indebtedness
stock - answers a claim to partial ownership in a firm
, financial intermediaries - answers financial institutions through which savers can
indirectly provide funds to borrowers
mutual fund - answers an institution that sells shares to the public and uses the
proceeds to buy a portfolio of stocks and bonds
national saving (saving) - answers the total income in the economy that remains after
paying for consumption and government purchases
private saving - answers the income that households have left after paying for taxes and
consumption
public saving - answers the tax revenue that the government has left after paying for its
spending
budget surplus - answers an excess of tax revenue over government spending
budget deficit - answers a shortfall of tax revenue from government spending
market for loanable funds - answers the market in which those who want to save supply
funds and those who want to borrow to invest demand funds
crowding out - answers a decrease in investment that results from government
borrowing
equity finance - answers the sale of stock to raise money
debt finance - answers the sale of bonds to raise money
stock index - answers an average of a group of stock prices, such as the Dow Jones
and the S&P 500
supply of loanable funds - answers comes from national saving, including both private
and public saving
demand for loanable funds - answers comes from firms and households that want to
borrow for purposes of investment
banks - answers financial intermediaries that (1) pay depositors interest to use their
money to make loans to borrowers, who are charged slightly more interest, with the
difference covering the banks' costs and returning some profit to the banks' owners and
(2) facilitate purchases of goods and services by allowing people to write checks against
their deposits and to access those deposits with debit cards
term - answers the length of time until a bond matures
Macroeconomics, 26th Edition
natural rate of unemployment - answers the normal rate of unemployment around which
the unemployment rate fluctuates
cyclical unemployment - answers the deviation of unemployment from its natural rate
frictional unemployment - answers unemployment that results because it takes time for
workers to search for the jobs that best suit their tastes and skills
structural unemployment - answers unemployment that results because the number of
jobs available in some labor markets is insufficient to provide for everyone who wants
one
job search - answers the process by which workers find appropriate jobs given their
tastes and skills
unemployment insurance - answers a government program that partially protects
workers' incomes when they become unemployed
union - answers a worker association that bargains with employers over wages,
benefits, and working conditions
collective bargaining - answers the process by which unions and firms agree on the
terms of employment
strike - answers the organized withdrawal of labor from a firm by a union
efficiency wages - answers above-equilibrium wages paid by firms to increase worker
productivity
sectoral shift - answers changes in the composition of demand among industries or
regions
seasonal unemployment - answers an elevated level of unemployment that is expected
to occur at certain times of the year because it is relatively regular and moderately
predictable
productivity - answers the quantity of goods and services produced from each unit of
output or for each hour of a worker's time
physical capital - answers the stock of equipment and structures used that are used to
produce goods and services
,human capital - answers the knowledge and skills that workers acquire through
education, training, and experience
natural resources - answers the inputs into the goods and services that are provided by
nature, such as land, rivers, and mineral deposits
technological knowledge - answers society's understanding of the best ways to produce
goods and services
diminishing returns - answers the property whereby the benefit from an extra unit of an
input declines as the quantity of the input increases
catch-up effect - answers the property whereby countries that start off poor tend to grow
more rapidly than countries that start off rich
brain drain - answers the emigration of many of the most highly educated workers to
rich countries, where these workers can enjoy a higher standard of living
property rights - answers the ability of people to exercise authority over the resources
they own
foreign direct investment - answers capital investment that is owned and operated by a
foreign entity
foreign portfolio investment - answers investment that is financed with foreign money
but is operated by domestic residents
real GDP per person - answers real GDP divided by population; the "average" output of
the economy per person measured in a base year prices; often used as a measure of
standard of living in comparisons over time of one country or between different
countries when measured in the same currency
rule of 70 - answers if a variable grows at a rate of x percent per year, then that variable
doubles in approximately 70/x years
financial system - answers the group of institutions in the economy that help to match
one person's saving with another person's investment
financial markets - answers financial institutions through which savers can directly
provide funds to borrows
bond - answers a certificate of indebtedness
stock - answers a claim to partial ownership in a firm
, financial intermediaries - answers financial institutions through which savers can
indirectly provide funds to borrowers
mutual fund - answers an institution that sells shares to the public and uses the
proceeds to buy a portfolio of stocks and bonds
national saving (saving) - answers the total income in the economy that remains after
paying for consumption and government purchases
private saving - answers the income that households have left after paying for taxes and
consumption
public saving - answers the tax revenue that the government has left after paying for its
spending
budget surplus - answers an excess of tax revenue over government spending
budget deficit - answers a shortfall of tax revenue from government spending
market for loanable funds - answers the market in which those who want to save supply
funds and those who want to borrow to invest demand funds
crowding out - answers a decrease in investment that results from government
borrowing
equity finance - answers the sale of stock to raise money
debt finance - answers the sale of bonds to raise money
stock index - answers an average of a group of stock prices, such as the Dow Jones
and the S&P 500
supply of loanable funds - answers comes from national saving, including both private
and public saving
demand for loanable funds - answers comes from firms and households that want to
borrow for purposes of investment
banks - answers financial intermediaries that (1) pay depositors interest to use their
money to make loans to borrowers, who are charged slightly more interest, with the
difference covering the banks' costs and returning some profit to the banks' owners and
(2) facilitate purchases of goods and services by allowing people to write checks against
their deposits and to access those deposits with debit cards
term - answers the length of time until a bond matures
