Inflation
What is inflation?
What is a persistent increase in average prices in an economy?
What is the definition of Unemployment and what is the formula for unemployment?
What is people willing and able to work, actively seeking work, but not employed?
What is (Number of Unemployed / Total Labor Force) x 100 ?
What is Aggregate Demand?
What is the total amount of all goods and services demanded in an economy at every price level?
What is the formula for GDP?
What is GDP=C+I+G+(X−M)GDP=C+I+G+(X−M)?
What is Deflation and what does it lead to?
What is the persistent decrease in average prices in an economy and that it leads to unemployment?
What is the goal for inflation each year?
What is for it to rise 2% yearly?
Name all the phases of the Business Cycle and their definitions.
1. Trough: Lowest output.
2.Recovery: The period of time where what has been lost in a contraction is recovered.
3. Expansion: GDP steadily increases.
4.Peak: Highest point before slowdown.
5. Contraction (Recession): Output decreases.
What is Aggregate Supply?
What is the total supply of goods and services produced at every price level?
What is the definition of GDP?
What is the total value of all final goods/services produced in a year?
Name the two types of Deflation.
What is Good Deflation and Bad Deflation?
What is pure inflation?
What is when prices rise with no increase in output whatsoever?
What is the natural rate of unemployment, and why is it not zero?
What is 4%, and it is not zero because an unemployment rate of 0% would mean no one would leave their jobs, which would mean no new businesses and no new innovation?
What does a shift to the right of the Aggregate Supply indicate, and what does a shift to the left of the Aggregate Supply indicate?
Shift left in AS:Higher resource costs, less resources, decreased productivity.
Shift right in AS:improvements in tech, cheaper resources, more resources (land, labor, capital).
What is the difference between nominal GDP and real GDP?
What is nominal GDP does not account for inflation and uses current market prices, while real GDP accounts for inflation and uses prices from a base year?
What is Good Deflation?
What is prices fallling while output increases?
Name both types of inflation and their definitions.
What is Demand-pull inflation( AD curves shifts right;more demand for goods), and cost-push inflation( AS curve shifts left; higher costs for supplies).
List the 4 types of Unemployment and their definitions.
Frictional: People leaving jobs in search of better ones or leaving education for their first job.
Seasonal: Jobs tied to seasons (laid off when demand falls at certain times).
Structural: Permanent fall in demand for a certain type of labor.
Cyclical: Caused by downturns in the business cycle.
What does a shift to the right of the Aggregate Demand indicate, and what does a shift to the left of the Aggregate Demand indicate?
Shift Right (↑ demand): Increases in avg. income and/or lower income taxes, the money supply (makes borrowing easier/cheaper by lowering interest rates), and in government spending.
Shift Left : Decreases in avg. income and/or lower income taxes, in the money supply (makes borrowing harder/more expensive by raising interest rates), and in government spending.
What is formula for GDP per capita and what is the difference between GDP per capita and Real GDP per capita?
GDP per capita: GDP ÷ population.
What is that GDP per capita only divides GDP by population, while real GDP per capita accounts for inflation and population and is the best measure of standard of living despite both methods being viable?
What is Bad Deflation?
What is prices fallling as output decreases?
What measures inflation and what is its formula?
What is CPI, and the formula = (Cost of Basket in Current Year / Cost of Basket in Base Year) × 100?
*Inflation Rate Formula= Current CPI-Base CPI/ Base CPI X 100*
Who is excluded from the labor force?
What is discouraged workers, students, stay-at-home parents, and physically/mentally unable people?
What are the 3 basic Macroeconomic Goals and their measures?
What is steady growth(GDP), stable prices (inflation rate), and full employment (Unemployment rate)?
What is the difference between Real Wages and Nominal Wages?
What is that Real Wages are adjusted for inflation, while Nominal Wages are not( they are actual wages)?
Explain how the cycle of Deflation works and Deflation can be fixed,
What is job termination leading to lower demand (AD shifts left) which leads to fewer products needed which leads to the cycle continuing and the deflation becoming even worse?
What is that measures such as tax incentives, lowering interest rates, and increase in govt. spending can fix deflation due to the measure pulling the AD curve right?