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GDP
Economic Growth
Unemployment
Inflation
Vocab
100
Why do economists want to measure GDP?
Predict economic downturns, help reduce the effects, prevent the downturn. Bring some predictability to the economy
100
What allows for new generations to enjoy more and better goods and services?
Economic Growth
100
If I am a business major but I could not find work related to my major and I am working as a waiter, I am considered ____________
Underemployed
100
What is inflation?
General increase in price
100
What is an intermediate good?
Goods used in the production of final goods
200
What is Gross Domestic Product?
The dollar value of all final goods and services produced within a country's borders in a given year
200
Name and describe one factor (other than capital deepening) that can affect economic growth
Savings and investing Population increases w/o capital increases Governement (taxes) Trade (can help or hurt)
200
Name 1 cause of structural unemployment
new technology, new resources, globalization, change in consumer demand, lack of education
200
Name and describe 1 effect of inflation on he money supply
Purchasing Power Income Interest Rate
200
What are durable and non durable goods? Give an example of them
Durable- Goods that usually last a long time Non-durable- Goods that usually last a short period of time
300
Describe the difference between he expenditure and income approach to finding GDP
Expenditure- Annual expenditures added up Income- All income added up in an economy in a year
300
Describe Real GDP per capita and why it economists might want to find this number
Real GDP divided by the population. The standard of living will improve if real GDP is rising faster than population, so economists can compare standards of living over time. It is also helpful to compare growth rates of different nations
300
Name a type of unemployment gov really does not worry over. Full employment is considered when there is no ____________ unemployment
Seasonal, Cyclical
300
What price index did we talk about? How does it work? Why do economists use price indexes?
Consumer price index- measures the change in price of fixed goods and services. The fixed goods and services are called the market basket. Can measure inflation rate. Its n=beneficial to know the changes in price over time
300
What is unemployment rate and who is considered in the labor force?
% of nation's labor force that is unemployed. Labor force is those with jobs and those 16 and above looking for jobs
400
Name 3 of the limitations of Gross Domestic Product
1. Non-market activities 2. Underground economy 3. Negative externalities 4. Quality of life
400
Describe the process of capital deepening?
Increase in capital leads to increase in output per worker leads to increase in production which leads to increased wages and increased labor demand
400
Who is considered in the labor force? What is the unemployment rate if there are 133.4 million people employed and 5.9 million people unemployed. (Formula is unemployed / total labor force). Is that a good unemployment rate?
Labor force = civilians 16 and up. Have job or seeking a job = 133.4 + 5.9 = 139.3 million 5.9 / 139.9 = 4.2% unemployment rate, yes between 4%-6% is considered good
400
Name and describe 1 of the causes of inflation
Quantity Theory- Print to much $ Demand- Pull Theory- Demand > supply Cost-Push Theory - Raise prices to cover higher costs
400
What is the market basket?
A representative collection of goods and services used by price indexes to find inflaion
500
Whats the difference between nominal and real GDP? Why do economists want to find real GDP?
Real GDP does not take changes of price into account when measuring GDP. Just because prices go up, does not mean the economy is growing, so they hold the price from the base year constant when measuring GDP
500
Measuring Economic Growth: If our real GDP was $5.6 billion in 1987 and $7.3 billion in 1997, what was our economic growth rate during those years?
7.3-5.6 / 5.6 = .3. Growth rate of 30%
500
Name and describe 3 of the 4 types of unemployment
Frictional Seasonal Structural Cyclical
500
CPI = (updated cost / base period cost) X 100 Inflation Rate = ((New CPI - Old CPI)/Old CPI)) X 100 If the base period market basket is $200 and the 2014 market basket is $330, what is my CPI. If 2013 CPI was 162, what is my inflation rate for 2014?
CPI = ($330/$200) X 100 = 165 Inflation Rate = (165-162)/162) X 100 = 1.85% inflation rate
500
What is aggregate supply and demand?
aggregate supply- the total amount of goods and services in the economy available at all price levels aggregate demand- the amount of goods and services in the economy that will be purchased at all price levels