ECON 162 Midterm: Fall16Econ162Midterm2Review

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Macroeconomics: study of the relationships between aggregate economic variables, and the choices made by policy makers to influence those variables. Macroeconomic objectives: stable rate of gdp growth, low unemployment (high employment, stable prices (low inflation) Primary macroeconomic variables measure: output unemployment international economy. Monetary system: output (gdp, gnp, national income (ni), nominal vs real, bureau of economic analysis (bea)) Most important measure in economy is gdp: gdp: measure of market value of all final goods and services produced within a country"s borders in a year. Changes in output determines whether economy is in expansion or recession. Goal of policymakers is to minimize the times of contraction (recession). Inflation/ prices if prices of goods and services are higher, then each unit of currency is able to purchase less of those goods and services. Inflation is an increase in absolute level of prices, but relative prices don"t change if all prices are increased proportionately.

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