Macroeconomics

Euler’s theorem:

The mathematical result

economists use to show that economic profit must be

zero if the production function has constant  returns to

scale and if factors are paid their marginal  products.

Ex ante real interest rate:

The real interest rate

anticipated when a loan is made; the nominal interest

rate minus expected inflation. (Cf. ex post real interest

rate.)

Ex post real interest rate:

The real interest rate

actually realized; the nominal interest rate minus

actual inflation. (Cf. ex ante real interest rate.)

Excess reserves:

Reserves held by banks above the

amount mandated by reserve requirements.

Exchange rate:

The rate at which a country makes

exchanges in world markets. (Cf. nominal exchange

rate, real exchange rate.)

Exogenous variable:

A variable that a particular

model takes as given; a variable whose value is inde-

pendent of the model’s solution. (Cf. endogenous

variable.)

Expansionary policy:

Policy that raises aggregate

demand, real income, and employment. (Cf. contrac-

tionary policy.)

Exports:

Goods and services sold to other countries.