GDP
What does GDP stand for?
Gross Domestic Product
People who are working or actively looking for work are part of the what?
Labor force
What is inflation?
A general increase in prices over time.
This term refers to the ups and downs of economic activity over time.
The business cycle
GDP stands for the total market value of all what, produced within a country in a given year?
Finished goods and services.
A recent college grad searching for their first job is an example of what kind of unemployment?
Frictional unemployment
During the early 2020s, the Fed described inflation as “transitory.” What did that mean?
Temporary
This phase of the business cycle is marked by rising GDP, increased spending, and more jobs.
Expansion
A new car produced in Michigan this year is counted in GDP, but a used car sold this year is not. Why?
Used goods aren’t included because they were already counted in GDP when first produced.
A factory worker loses their job because machines now do their work. What type of unemployment is this?
Structural unemployment
What is "the Fed"?
Short for the Federal Reserve, it is the central bank of the United States.
During this phase, production reaches its highest point, and inflation may begin to rise.
Peak
A company builds new robots for its factory. Is this consumption, investment, government spending, or exports in GDP?
Investment
During a recession, demand falls and businesses lay off workers. What kind of unemployment rises?
Cyclical unemployment
What happens when supply chain issues make it hard for companies to keep up with demand?
Prices rise
When businesses cut back production, unemployment rises, and consumer spending falls, the economy is in this phase.
Contraction
Why might GDP not be a perfect measure of a country's well-being?
It doesn’t include informal work, inequality, environmental quality, or unpaid labor.
Even in a healthy economy, some unemployment still exists. What is this called, and why does it happen?
Natural rate of unemployment; because people change jobs or industries over time.
Why is inflation a good thing in small doses?
It encourages spending and investment and signals a healthy and growing economy.
This phase marks the turning point where economic decline stops and growth begins again, often encouraged by lower interest rates or government spending.
Trough