GDP
Stable prices, full employment, and economic growth and the three what?
economic goals of society
___ is hurt by inflation
___ is helped by inflation
low income
borrowers
total number of eligible adult citizens who are working or actively looking for work
labor force
automatic stabilizers
go into effect automatically to increase or decrease taxes and spending according to needs of the economy
debt vs. deficit
debt: government owes
deficit: government spends more than it has in a fiscal year
Dollar value is the total of the selling prices of all goods and services produced ____?
in a calendar year
the three uses of money are
1. medium exchange: anything used to determine value
2. unit of account: a way to compare the value
3. Store of value: money keep value if you store it instead of spending it
EXPANSION, PEAK, CONTRACTION, TROUGH
contractionary fiscal policy
government uses policies to stunt economic growth
what is a budget deficit
Intermediate goods are goods used in production of other goods and are _____?
NOT counted towards GDP
the decision the fed makes about money and banking
Monetary policy
The calculation for unemployment is:
UR=UW/TLFx 100
Unemployment rate= unemployed workers/total labor force x 100
government encourages economic growth
expansionary fiscal policy
what is a budget surplus
amount of money spent is LESS THAN collected
What is not included in GDP
Used goods, intermediate goods, off the books income, financial transactions (stocks), household production
three ways the fed controls amount of money in use:
1. open market operations
2. discount rate
3. reserve requirement
united states natural rate of employment
4-6%
expansionary monetary policy:
if the economt needs to grow and the fed wishes to raise money supply it:
lower fed discount rates and lower reserve requirements
what is a balanced budget
amount of money spent is the SAME as money collected
C+I+G+(X-M) is the formula for GDP. What does each letter stand for?
C- Consumption (households)
I- Investment (businesses)
G- Government Spending
(X-M)- Exports-Imports
1. commodity,
2. representative, and
3. fiat are
the three types of money
1. value within itself
2. makes objects have values b/c can trade for value
3. government gave it value
those of working age that are not looking for work and stay at home parents, retirees, full time students, and prison inmates are ___
not counted towards unemployment
Contractionary monetary policy:
if inflation is too high and economy needs to shrink:
raise fed discount rates and raise reserve requirements
ten steps in budget process