GDP & Data
This government agency conducts the National Income and Product Accounts that measure U.S. GDP.
What is the Bureau of Economic Analysis (BEA)?
This equation, MV = PY, relates the money supply, velocity, price level, and real output.
What is the Quantity Equation (Quantity Theory of Money)?
This empirical relationship states that a 1% rise in unemployment is associated with a 2% fall in real GDP.
What is Okun’s Law?
This economist developed the neoclassical growth model that explains how capital accumulation drives economic growth.
Who is Robert Solow?
This concept holds that a $1 increase in government spending raises GDP by more than $1 due to induced consumer spending.
What is the fiscal multiplier?
GDP = C + I + G + NX. This letter represents net exports of goods and services.
What is NX
According to the Fisher Effect, a one percentage point rise in inflation causes this to happen to nominal interest rates.
What is a one percentage point rise (nominal rate rises one-for-one with inflation)
This theory holds that firms pay above-market wages to increase worker productivity and reduce shirking.
What is efficiency wage theory?
In the Solow model, the economy reaches this state when investment equals depreciation and capital per worker stops changing.
What is the steady state?
This model extends IS-LM to the open economy, showing effects of fiscal and monetary policy under fixed and floating exchange rates.
What is the Mundell-Fleming model?
This ratio of nominal GDP to real GDP measures the overall price level in the economy.
What is the GDP Deflator?
This term describes the extra inflation tax paid by people who hold cash when inflation is unexpectedly high.
What is the shoeleather cost (or inflation tax)?
Above-equilibrium wages caused by unions, efficiency wages, or minimum wage laws can cause this type of unemployment.
What is structural unemployment?
This level of capital maximizes consumption per worker in the steady state.
What is the Golden Rule level of capital accumulation?
The short-run tradeoff between inflation and unemployment is depicted by this curve.
What is the Phillips Curve?
This type of GDP adjusts for changes in the price level to allow comparisons across time periods.
What is Real GDP?
When the central bank increases the money supply to pay government bills, this extreme form of inflation can result.
What is hyperinflation?
The unemployment rate that prevails when the economy is in neither a boom nor a recession.
What is the natural rate of unemployment?
This is the key variable the Solow model points to as the ultimate driver of long-run growth — it cannot be explained within the basic model
What is technological progress (total factor productivity)?
This curve shows combinations of output and interest rates where the goods market (investment = saving) is in equilibrium.
What is the IS curve?
This measures the total market value of all final goods and services produced within a country in a given year
What is GDP (Gross Domestic Product)?
This classical principle states that changes in the money supply affect nominal but not real variables in the long run.
What is monetary neutrality (or the classical dichotomy)?
This type of unemployment occurs when workers are between jobs and searching for new ones.
What is frictional unemployment?
Unlike the Solow model, this type of growth theory tries to explain technological change from within the model using R&D and human capital.
What is endogenous growth theory?
This model combines the goods market and money market to determine output and interest rates in the short run.
What is the IS-LM model?