Macro Unit 4 Vocab Quiz

 ownership of a small piece of a company. If the company earns profits, the stock owner (shareholder) gets a piece of the profits (dividend).  

A debt contract in which a business or government borrows a sum of money (the principle) for a set period of time (term). At the end of the term the principle is returned to the investor

 what you must give up in order to have it; the value of the next best alternative.

The interest rate that you earn (or pay) on a loan; this is the amount you see on a sign advertising interest rates.

the nominal interest rate adjusted for inflation; this is the effective interest rate that you earn (or pay).

 believe that the market is always clear because price would adjust through the interactions of supply and demand

 caused by an aggregate demand shift to the right due to a shock in one of the determinants of GDP such as government spending or investment.

 a system in which only a fraction of bank deposits are required to be available for withdrawal

determines the maximum expansion of the money supply that will occur when new money is introduced into the banking system.

caused by a sudden scarcity of factors or rather an increase in factor costs. This shifts the SRAS curve to the left causing output to fall below the natural level of output and prices to increase. the cost of things “pushes'' inflation higher