Macro & GDP
This is the study of the health of the large economy as a whole. It is the study of the big picture.
What is Macroeconomics?
This is workers that are actively looking for a job but aren’t working.
What is unemployment?
This is the rising general level of prices and it reduces the “purchasing power” of money.
What is inflation?
Actions taken by Congress to stabilize the economy
What is Fiscal Policy?
A system where goods and services are traded directly. There is no money exchanged.
What is the Barter System?
The field of Macroeconomics was born during this significant time period in US History when unemployment was 25%
What is the Great Depression?
Also known as the economic cycle or trade cycle, are the fluctuations of gross domestic product around its long-term growth trend. The length is the period of time containing expansion and contraction in sequence.
What is the business cycle?
this is a wage measured by dollars rather than purchasing power.
What is Nominal Wage?
Laws that reduce inflation, decrease GDP (Close an Inflationary Gap).
Decrease Government Spending.
Increase Taxes (Decreasing disposable income).
Combinations of the Two.
What are Contractionary Fiscal Policies?
Something that serves as money but has no other value or uses.
What is Fiat Money?
This is the dollar value of all final goods and services produced within a country in one year.
What is Gross Domestic Product?
These are the three types of unemployment?
Name two of the three
1. Frictional Unemployment - temporary or in between jobs.
2. Structural Unemployment - Changes in the labor force make some skills obsolete.
3. Cyclical Unemployment- Unemployment caused by a recession
These are numbers assigned to each year that show how prices have changed relative to a specific base year.
What are Price Indices?
This is the accumulation of all the budget deficits over time.
What is the National Debt?
These are the functions of money? Name 2 of the 3.
1. A Medium of Exchange
2. A Unit of Account (Measure of Value)
3. A Store of Value
All countries have 3 economic goals. Name two of them.
What is
Promote Economic Growth
Limit Unemployment
Keep Prices Stable (Limit Inflation)
This is a 6 month period of decline in Real GDP.
What is a recession?
This is the most commonly used measurement of inflation for consumers.
What is the Consumer Price Index?
Government policies designed to increase production by reducing business taxes and/or regulations.
What are Supply-side Fiscal Policies?
This is the amount of goods and services a unit of money can buy.
What is Purchasing Power?
This is the formula for calculating GDP
GDP (Y) = C + I + G + N
C, I, G, and N are the four components for calculating GDP. What do they stand for? Name at least 2.
Consumer Spending- ≈ 70% of U.S. GDP
Business Investment- ≈ 16% of U.S. GDP
3. Government Spending- ≈ 17% of U.S. GDP
4. Net Exports- Exports (X) – Imports (M) ≈ -3%
This is Frictional plus Structural unemployment. The amount of unemployment that exists when the economy is healthy and growing.
What is the Natural Rate of Unemployment (NRU)
This GDP is expressed in constant, or unchanging, dollars and adjusts for inflation.
What is Real GDP?
These are government policies most likely to result in long-run economic growth?
Name 2 of the 3
1. Education/training spending
2. Infrastructure spending- public works like roads, bridges, and harbors
3. Production/Investment incentive programs (e.g. investment tax credits)
This is when the central bank adjusts the money supply to speed up or slow down the economy
What is Monetary Policy?
Created in 1913, it's this organization's job to regulate banks, set target interest rates and ensure Americans have faith in our financial system.
What is the Federal Reserve?