Gross Domestic Product (GDP)
The total dollar value of all final goods and services produced within a country in one year
What is GDP?
Temporary unemployment or being between jobs.
Individuals are qualified workers with transferable skills.
What is frictional unemployment?
Index numbers assigned to each year that show how prices have changed relative to a specific base year.
What is a price indice?
GDP measured in current prices. It does not account for inflation from year to year.
What is nominal GDP?
The lowest point of a recession, just before output and employment start to turn up again
What is a trough?
This approach to GDP adds up all the income earned in the economy including wages, rent, interest and profit
What is the income approach?
Changes in the labor force make some skills obsolete.
These workers DO NOT have transferable skills and these jobs will never come back. Workers must learn new skills to get a job.
What is structural unemployment?
The most commonly used measurement of inflation for consumers
GDP expressed in constant, or unchanging, dollars-adjusts for inflation.
What is Real GDP?
A very deep and prolonged downturn
What is a depression?
This approach to GDP adds up all the spending done in the economy by households, businesses, the government, and other countries.
GDP= C + I + G + X-M
What is the Expenditure Approach?
Unemployment caused by a recession.
As demand for goods and services falls, demand for labor falls and workers are laid off.
What is cyclical unemployment?
Prices increasing at slower rates
What is disinflation?
Measures changes in the prices of goods and services produced in the United States, including those exported to other countries. Prices of imports are excluded.
What is the GDP deflator?
Occurs when an economy's actual production is lower than its potential production.
What is a recessionary gap? (will also accept negative output gap)
Goods that are used in the production process to produce final goods
What are intermediate goods?
The amount of unemployment that exists when the economy is healthy. It includes both frictional and structural unemployment
What is the Natural Rate of Unemployment?
A list of goods and services that are commonly purchased by a group of people
What is a market basket?
GDP divided by the population. It identifies on average how many products each person makes.
What is GDP per capita?
Occurs when an economy's actual output is higher than its potential output. This gap is characterized by high prices and low unemployment.
What is an inflationary gap? (will also accept positive output gap)
Social security, Medicare, and welfare are these types of payments?
What are transfer payments?
Someone who in unemployed but gives up looking for a job
What is a discouraged worker?
(Cost of current basket/Cost of basket in base year) X 100
What is the equation for CPI?
(Nominal GDP/Real GDP) x 100
What is the equation for the GDP deflator?
The level of real GDP the economy can produce when all resources are fully employed
What is full employment level of output?