ECON 132A Lecture Notes - Lecture 9: Federal Reserve System, Money Supply, Income Statement

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Gross domestic product (gdp): market value of goods and services produced over period of time. Unemployment rate: ratio of number of unemployed to total labor force. Inflation: rate at which general level of prices for goods and services is rising. Interest rates: high interest rates reduce present value of future cash flows. Budget deficit: government spending in excess of government revenues. Sentiment: consumer optimism/pessimism are determinants of economic performance. Fiscal policy: use of government spending and taxing for stabilizing economy. Monetary policy: actions taken by board of governors of federal reserve. System to influence money supply or interest rates. Defensive industries: industries with below-average sensitivity to state of economy. Want to be in these when economy slows down. Cyclical industries: industries with above-average sensitivity to state of economy. Sector rotation: shifting portfolio into industry sectors expected to outperform others based on macroeconomic forecasts.

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