Labor-force participation rate-refers to the number of people who are either employed or are actively looking for work.

Law of demand for foreign exchange states that other things remaining the same, the higher the exchange rate, the smaller is the quantity of Canadian dollars demanded on the foreign exchange market.

Leakage - withdrawal of potential spending from the income-expenditures stream via saving, tax payments, or imports 2) a withdrawal that reduces the lending potential of the banking system.

Law of supply for foreign exchange states that other things remaining the same, the higher the exchange rate, the greater is the quantity of Canadian dollars supplied in the foreign exchange market.

Long-run aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible.

Long-run aggregate supply inputs prices (ex: wages) adjust with output prices and vice versa, this eliminates the incentive to produce more or less output at higher or lower price levels since purchasing power of per-unit profits has not changed.

Long-run economic equilibrium when the point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve

Long-run aggregate demand In long-run, shift in aggregate demand affect the overall price level but not output. In short-run, shifts in aggregate demand cause fluctuations in price leave and economy's output of goods.

Long-run vertical Philips Curve Curve that shows in the long run, there is NO tradeoff between inflation and unemployment.  Any rate of inflation is consistent with the NRU - Increase in AD beyond NRU → temporarily boost profits, output, employment → nominal wages increase → profits fall → back to original level of unemployment.

Lump-sum tax-is a tax that is a fixed amount, no matter the change in circumstance of the taxed entity.

Marginal Propensity To Consume(MPC)-a component of Keynesian theory, MPC represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services, as opposed to being saved.

Marginal propensity to save (MPS)-indicates what the household sector does with extra income

Mainstream View Holds that instability in the economy arise from price stickiness and from unexpected shocks to either aggregate demand or aggregate supply. sticky prices make it difficult for the economy to quickly and fully adjust to economic shocks from either unexpected changes in aggregate demand or supply.

Menu costs-An economic term used to describe the cost in curred by firms in order to change their prices

Monopsony is a market form in which only one buyer faces many sellers.

Monetary policy the central bank's use of changes in the quantity of money or the interest rate to stabilize the economy.

Monetary rule Advocates that the money supply grow at pace with the growth in real output. This school of thought is opposed to both discretionary monetary policy and discretionary fiscal policy.

Monetarism An economic theory holding that variations in unemployment and the rate of inflation are usually caused by changes in the supply of money

Multiplier- any measure of the proportional effect of an exogenous variable on an endogenous variable.

Multiple Counting - Wrongly including the value of intermediate goods in the GDP; counting the same good or service more than once.

National income-the total netvalue of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation.

National Income - Total income earned by resource suppliers for their contributions to GDP plus taxes on production and imports; the sum of wages and salaries, rent, interest, profit, proprietors' income, and such taxes.

National Income Accounting - The techniques used to measure the overall production of the economy and other related variables for the nation as a whole

Natural Unemployment-the lowest rate of unemployment that an economy can sustain over the long run.

Net domestic product - The net domestic product (NDP) equals the gross domestic product (GDP) minus depreciation on a country's capital goods.Net domestic product accounts for capital that has been consumed over the year in the form of housing, vehicle, or machinery deterioration.

Net Exports-the value of a country's total exports minus the value of its total imports. It is used to calculate a country's aggregate expenditures, or GDP, in an open economy.

Net borrower A country that has a current account deficit and that borrows more from the rest of the world than it lends.

Net lender is a country that lends more to the rest of the world than it borrows from it

Net private domestic investment - gross private domestic investment less depreciation.

New classical economics An approach to macroeconomics that studies macroeconomic questions using traditional microeconomics building blocks that emphasize rationality, holds that when the economy occasionally diverges from its full-employment output, internal mechanisms within the economy will automatically move it back to that output.