AD shocks
SRAS
Unemployment
GDP CPI Inflation
Wildcard
100
A decrease in the price level causes C,I, and NX to go ?
up
100
Who are the groups that impact SRAS
Firms
100
What can overestimate the unemployment rate?
People lying and saying they are looking for work when they are not
100
What is the GDP Equation
Bonus: What else does this equation equal and why
C+I+G+(EX-IM)
Also equals AD because we assume the "sum of sending" also means "sum of demand"
100
What does GDP stand for
Gross Domestic Product
200
Why would C change?
Things that affect spending by consumers
200
What is considered the short run?
What is considered the long run?
short run- there is something that can't change
long run - everything can change
200
How long ago do you have to give up looking for a job to no longer be considered unemployed
Bonus: if you recently gave up looking you are what?
4 weeks
Marginally Attached
200
What does the CPI measure, whats it used to measure
A measure of how much consumers spend on a fixed basket of goods and services
Captures overall level of prices in the economy
200
What is Katelyns major?
Marketing and econ!
300
What are the main categories that change AD and an example of each one
consumers, investment spending, government spending, net exports
300
True or false: wage is a supply shifter
True
Double points for the explanation
300
Who is included in the labor force
Also, mention the labor force calculation (don't over think this)
Those of age to work, who physically can, looking for work or currently working.
Sum of employed and unemployed
300
How do you calculate the percent change in inflation
Inflation year 2 = (GDP deflator year 2 ' GDP deflator year 1)/ GDP deflator year 1 *100
300
Why is the LRAS curve vertical?
It is maximum potential output in the economy
400
What is the Wealth effect
Changes in prices affect how much you can buy with your money, your income can buy more stuff, making you effectively wealthier
400
What are some things that are sticky in the short run
prices and wages
400
What are they types of unemployment and give an example of each
Structural - wages above equilibrium firms want to hire less
Cyclical - bad economy
Frictional - searching for new jobs
400
What is the difference between nominal and real GDP
Nominal: Spending on GDP goods and services in a year using that years prices and quantities
Real: Spending on GDP goods and services in a year using quantities in that year but constant prices
400
Why could the LRAS curve shift?
A change in Land capital natural resources or technology
500
Draw a basic ASAD graph, if there is a decrease in consumer spending what happens to SR equilibrium?
Recessionary gap SR equilibrium is less than potential output
500
A change in the price level causes a movement along the SRAS curve. What will cause it to shift?
Change in firms costs
materials, labor, rent, utilities
500
Calculate the unemployment rate
population 950
350 people with full time jobs
25 part time workers but want full time jobs
250 people who want to work but not currently looking for work
75 people not working but looking
= # unemployed/labor force *100
labor force 350+25+75 = 450
75/ 450= 16.67%
500
Calculate the nominal and real GDP for this economy
2020 shoes: $20 450 pairs sold shirts $10 500 sold
2021 shoes $25 475 pairs sold shirts $20 750 sold
2020 nominal and real $14000= (20*450)+(10*500)
2021 real $17000 = (20*475)+(10*750) 9500
500
Draw an ASAD graph
