CLEP Macroeconomics
Terms & Definitions
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Exchange ratio
The amount of currency you get per dollar. in the example in the text, the exchange rate is 110 yen for one dollar
Opposite of depreciation and results in a "stronger" currency. a stronger currency helps importing industries and citizens traveling abroad, while hurting exporting industries and domestic tourism. currency appreciation leads to larger trade deficit or a smaller trade surplus
Stagflation increase in price level and unemployment is caused by shocks to supply that shift AS leftward and result in a rightward shift in the Phillips curve supply shocks can be caused by droughts, technical snafus such as computer viruses, or restrictions on the use of resources occurred in the 1970s with oil
Involves increasing government purchases, increasing transfers, or decreasing taxes in order to shift aggregate demand to the right and boost real GDP