GDP
The total market value of all final goods and services produced within a country’s borders in a given period.
What is Gross Domestic Product (GDP)?
A sustained increase in the general price level of goods and services
What is inflation?
People who are willing and able to work but cannot find a job
What is unemployment?
The central bank of the United States
What is the Federal Reserve?
A tax that takes a larger percentage of income as income rises
What is a progressive tax?
GDP that has been adjusted for inflation
What is Real GDP?
Extremely rapid and out-of-control inflation
What is hyperinflation?
Short-term unemployment that occurs when people are between jobs or searching for a better one
What is frictional unemployment?
The interest rate the Federal Reserve charges banks for short-term loans
What is the discount rate?
Government spending that is required by law (example: Social Security, Medicare)
What is mandatory spending?
GDP divided by the population
What is GDP Per Capita?
Inflation caused by rising production costs (example: higher oil or wage costs)
What is cost push inflation?
Unemployment caused by a mismatch between workers’ skills and the jobs available
What is structural unemployment?
The percentage of deposits that banks are required to hold and not lend out
What are reserve requirements?
Government spending that Congress can change each year (example: defense, education)
What is discretionary spending?
Goods used as inputs in the production of other goods (not counted in GDP to avoid double-counting)
What are intermediate goods?
Inflation caused by too much demand chasing too few goods
What is demand pull inflation?
Unemployment that rises and falls with the business cycle (higher during recessions)
What is cyclical unemployment?
The Fed’s main tool: buying or selling government securities to influence the money supply
What are open market operations?
When the government spends more than it collects in tax revenue in a given year
What is a budget deficit?
C + I + G + NX
What is the formula for calculating GDP? what does each part mean?
A combination of high unemployment and high inflation at the same time
What is stagflation?
The unemployment rate that exists even when the economy is healthy (mainly frictional + structural)
What is the natural rate of unemployment? (or full employment)
The secret 1910 meeting that helped create the plan for the Federal Reserve
What is the Jekyll Island meeting?
The total amount the government owes from past deficits
What is the national debt?