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Microeconomic ConceptDefinition or explanationMacroeconomic Equivalent Definition or explanation
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1. MarketA place where buyers and sellers meet to engage in trade National EconomyThe sum of economic activity undertaken by a nations households and firms in the product and resource market in a given year.
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2. DemandA schedule or curve that shows the quantity of a good or service that consumers are willing and able to buy at a range of prices in a period of time.Aggregate DemandA curve representing the total quantity of a nation's output demanded by households, firms, the government and foreigners at a range of price levels in a period of time.
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3. SupplyA schedule or curve that shows the quantity of a good or service that firms are willing and able to produce at a range of prices in a period of time Aggregate SupplyA curve representing the total quantity of national output (goods and services) a nation's firms are willing and able to produce at a range of price levels in a period of time.
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4. PriceAmount paid for the good- signals from buyers to sellers to show what is demanded by society. Average Price levelA measure of the average prices of a nation's output of goods and services, determined using a consumer price index (CPI). Can increase over time (inflation) or decrease (deflation)
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5. Quantitythe total amount of goods or services that are demanded and/or supplied at any given point in timeReal GDP (or national output) A measurement of the value of all the finished goods and services produced in a nation in a year
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6. Decrease in Demand leads to...A decrease in price and a decrease in the quantity suppliedDecrease in Aggregate demand leads to...Recession: a decrease in the total output of goods and services in a nation between two periods of time, and deflation: a decrease in the average price level of a nation's output over time
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7. Increase in demand leads to...An increase in price and an increase in quantity suppliedIncrease in Aggregate demand leads to...Short-run Economic Growth: an increase in total output of goods and services over time, and inflation: an increase in the average price levle of a nation's output over time
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8. Decrease in supply leads to...An increase in price and a decrease in quantity demanded.Decrease in Aggregate supply leads to..."Supply-shock": A decrease in national output and an increase in the average price level (recession and inflation).
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9. Increase in supply leads to...A decrease in price and an increase in quantity demandedIncrease in Aggregate supply leads to...Long-run Economic growth: An increase in the nation's potential output achieved through lower resource costs or more productive resources.
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10. Indirect taxesTaxes placed on consumption. Can be "per unit" or "ad valorem". Also called "excise taxes"Direct taxationTaxes on the incomes earned by households or firms.
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11. SubsidiesPayments from the government to producers of particular goods or services aimed at increasing the supply and reducing the price.Government SpendingA component of a nation’s GDP, consisting of all expenditures made by a nation’s government in a year on public goods, services and infrastructure in a nation.
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