Macro 1
What are the 3 basic Macroeconomic goals?
Promoting economic growth
Preventing peaks in the business cycle
Keeping prices stable
This type of unemployment occurs when there is a recession
Cyclical
This type of unemployment occurs when there someone is in between jobs
This type of unemployment is when someone is replaced by a robot or technology
Structural
Draw an economy in long run equilibrium
LR equilibrium
The dollar value of all final goods and services produced within a country in one year is
Gross Domestic Product (GDP)
When an economy is at the natural rate of unemployment, what type(s) of unemployment are present?
Natural Rate of Unemployment (4-6%) structural and frictional
What phase of the business cycle is characterized as periods of economic growth?
Expansion
The rise in general price levels over time is called
Inflation
Draw what happens on an AS/AD diagram if there is an increase in wealth
Increase in wealth
What are the 4 components of GDP?
Consumption, Investment, Government Spending, Net Exports
The best measure of a nation’s standard of living is
GDP per capita
A 6-month period of declining Real GDP is called a/an
Recession
What measures the change in price of a market basket of commonly purchased goods and services?
CPI Consumer Price Index
Draw an AS/Ad diagram showing increase in interets rates.
Increase in interest rates
What goods are NOT included in GDP?
intermediate goods, nonproduction transactions (Medicare, medicade, SS) , nonmarket/illegal activities
The percentage of people in the labor force who want a job but are currently not working makes up the
Unemployment Rate
To calculate the change in prices from year to year, the Consumer Price Index measures the change in the total cost of the
Market basket of goods
All of the following are hurt by unanticipated inflation EXCEPT:
Borrowers
Savers
Those living on fixed incomes
Lenders
Borrowers
Draw an inflationary gap
Inflationary gap
Bob buys a new robot for his steel production business. This transaction would be included in what component of GDP?
Investment
In what order do the phases of the business cycle flow?
Expansion – Peak – Contraction – Trough
The most commonly used measure of economic growth is in a country is
Real GDP
Expansionary fiscal policy are laws aimed at reducing unemployment. How might Congress use expansionary fiscal policy?
Increase government spending and decrease taxes
Draw a diagram to represent structural unemployment
Structural unemployment