Circular Flow Diagram
Output of product market
What are goods and services?
What does GDP stand for ?
What is Gross Domestic Product?
Tends to reduce the unemployment rate
What is fast economic growth?
A government mandated floor on the price of labour
What is the minimum wage?
What are the four components of GDP using the income approach?
Wages, Rent, Interest and Profit
What do households offer the resource market?
What is Revenue?
GDP divided by the size of the population
What is GDP per capita?
Unemployment due to the time workers spent in work search
What is frictional unemployment?
What are Effiency Wages?
Wages that employers set above the equilibrium wage rate as an incentive for better employee performance.
What are the 4 components of expenditure approach?
What are Consumption, Investment, Government Spending and Net profits?
What two things are shared between the government and the financial sector?
Public Borrowing (from the financial sector to the government) and Public Savings (from the government to the financial sector).
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes.
What is real GDP?
Mismatch between job seekers and types of jobs available
What is structural unemployment?
What leads to structural unemployment?
What are minimum wages?
What real GDP does not include
What are many things that contribute to happiness?
the total amount of household income available to spend on consumption
What is disposable income?
The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced.
What is nominal GDP?
Unemployment rate
What is the percentage of the total number of people in the labor force that are unemployed?
The wage rate divided by the price level to adjust for the effects of inflation or deflation.
What is real wage?
the difference between the two types of calculating GDP
What is nothing? If you use both methods you should have the same number
Leaks out of the circular flow in the expanded circular flow model?
What is the value of exports
total quantity of final goods and services the economy produces
What is the aggregate output
How do you calculate unemployment rate?
Number of unemployed workers divided by the labor force multiplied by 100
Describe how minimum wages lead to structural unemployment?
When the minimum wage exceeds the market equilibrium wage rate, the number of workers who would like to work at that minimum wage is greater than the number of workers demanded at that wage rate leading to unemployed people.
Write the GDP formula expenditure approach in variables
GDP = C + G + I + NX