Section 1
Macroeconomics
Studies the economy as a whole
(Ex): Studies of all parts of the economy
Expansion
Real GDP grows from a low point; period of economic growth
(Ex): When a business is growing and making money
Demand Slump
In response to a decrease in demand, businesses reduce production
(Ex): When people don't want a product, the production for the product slows down
Growth in population=
Growth in the economy
(Ex): As more people invest in the stock market, the stocks grow
Business cycle
Expansion, peak, contraction, trough.
(Ex): When a business grows in revenue, gets to its highest point of revenue, then starts to slowly not sell as many products until it hits its lowest time of not selling produce. Once this all happens, the business cycle starts all over again, because once you are at the low point all you can do is go up
Gross Domestic Product (GDP)
The market value of all final goods and services produced in a nation in a given time period
(Ex): The amount of money a nation makes in a certain time
Peak
Where real GDP is at its highest; prices rise, resources tighten, business becomes less profitable
(Ex): Where a business is at its highest selling point, like when everybody wanted fidget spinners and they were selling like hotcakes
Rising interest rates causes a...
A negative ripple effect in the economy
(Ex): Borrowing money to make purchases
4 Key factors that determine economic growth
1. Natural Resources
2. Human Resources
3. capital
4. Technology
(Ex): How much money is made, the things making the product, and how much space you have to make a product will all affect how much products you can make. Which will ultimately help the economy grow if you are selling more products
Consumption: All spending by households on...
Durable Goods: Something that...
Durable goods, nondurable goods, and services
(Ex): Food, cars, lawn mowing^
Does not wear out quickly
(Ex): A car can last many years by not wearing quickly
Contraction
Producers cut back, resources become less scarce and prices stabilize or fall
(Ex): less amount of people are wanting to buy a certain product
Falling interest rates cause a...
Positive ripple effect in the economy
(Ex): More people have more money to spend on things that want because the interest rates have fallen
Productivity
The ratio of the amount of output produced to the amount of input
(Ex): Building bookshelves
Nominal GDP
States GDP in terms of the current value of goods and services
(Ex): How much money a state makes in what they sell
Trough
The point in which real GDP and employment stop declining; it signifies a complete business cycle
(Ex): Where a business is at its all-time low and doesn't sell anymore products
External issues that can affect the economy
Natural disaster
(Ex): If a big hurricane happens, money from the government and people will be given to help that specific country of place which might raise or lower a specific stock
What factors contribute to productivity
Quality of labor, Technology innovation, Energy costs, and financial markets
(Ex): How much money you spend on energy, how well your product is made, and how much technology you have you to make a product can all affect how much products you can make in a certain time period
Real GDP
Changes in prices from year to year
(Ex): How much money is made from year to year
Stagflation
Where prices rise at the same time of slowing business activity
(Ex): Where a business can still be making money where not as many products are being made. But that products being made are sold for more
Leading indicators
measures of economic performance that change 6-9 months before real GDP
(Ex): New building permits show that new buildings are going to be built soon
Multifactor Productivity
The ratio between the amount of output produced by an industry/business, and the amount of inputs used
(Ex): How much money is made from a product vs how much money is put into a product