INVESTMENT TERMS

Macroeconomics

The study of the behavior an economy at the aggregatelevel, as opposed to the level of a specific subgroups or individuals (which is called microeconomics). For example, a macroeconomist might consider the industrialsector, the services sector or the farm sector, but he/she will not consider specific parts of any of these sectors. Factors studies include inflation, unemployment, and industrial production, often with the aim of studying the effect of governmentpolicy on these factors.

GDP

The total market value of all final goods and services produced in a country in a given year, = total consumer, investment and government spending + the value of exports - the value of imports.

GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP doesn't include goods and services produced by foreignproducers, but does include goods and services produced by U.S. firmsoperating in foreign countries.

Recession

A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. A recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression. There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the President himself, the head of the Federal Reserve, or the entire administration.