Formulas
Unemployment
Inflation
GDP
Wild Card
"Potluck"
100
The expenditure approach to GDP
GDP = ___
C + I + G + Xn
SPENDING
C-consumption, I-investment, G-government, Xn-(X-M) Exports - Imports
100
Temporary unemployment or being between jobs. Individuals are qualified workers with transferable skills.
Frictional Unemployment
100
Helped or hurt by inflation? A man who lent out $500 to his friend in 1960 and gets paid back $500 in 2015.
What is hurt?
100
If the Real GDP = $200 billion and the deflator (price index) is 200, Nominal GDP is?
Nominal GDP = (deflator X Real GDP) / 100
(200 X 200) / 100 = 400 billion.
100
Draw a PPC for capital (X axis) and consumer goods (Y axis) for Country Z. Label C the NRU and label E to show 10% unemployment.
C - any point on the line. 10% unemployment anywhere under the line
Any point on the line is NRU. E should be under the curve.
100
This type of unemployment increase during a recession.
Cyclical unemployment
200
GDP Deflator =
GDP Deflator =
(Nominal GDP / Real GDP) x 100
The result is a measure of an economy's inflation or deflation
200
Seasonable Unemployment
Frictional Unemployment
200
Helped or hurt by inflation? An elderly couple living off fixed retirement payments of $2000 a month
What is hurt?
200
The dollar value of all final goods and services produced within a country’s borders in one year.
What is GDP?
200
Draw a Supply and Demand curve to demonstrate your understanding of a price ceiling. Label the model with a surplus or a shortage.
200
Nominal wage increases from $14 to $16 per hour and at the same time the general price level increases by 12%, the worker's real wage has increased/decreased by
2%
(16-14)/14*100
14% - 12% = 2%
300
Unemployment Rate =
(Number of Unemployed / Number in the Labor Force ) X 100
300
Unemployed due to changes in the labor force making skills obsolete.
Structural Unemployment
300
Reduction of the general level of prices in an economy
What is Deflation?
300
The equation for finding a change in GDP
What is (Year 2-Year 1)/Year 1 x 100?
300
In an economy, Real GDP (base year = 1996) is $125 billion and the Nominal GDP is $150 billion. Calculate the GDP deflator.
What is 120?
150/125 = 1.2 X 100=120
(nominal GDP/Real GDP) x 100
300
Another name for the Productions Possibility Curve (PPC)?
Productions Possibility Frontier (PPF)
400
Consumer Price Index =
CPI =
(Price of market basket/Price of market basket in base year.) X 100
400
Unemployment caused by a recession.
Cyclical Unemployment
400
If the CPI increases from 200 to 240 in a one year period, then the inflation rate is?
What is 20% ?
400
This is the best measure of a nation’s standard of living.
What is GDP per Capita?
400
What is the Unemployment Rate?
Civilian non-institutional population - 250M
Employed - 135M
Unemployed - 15M
Unemployed / Civilian Labor Force = UR
(15M/150M) X 100 = 10%
400
This index measures the cost of a typical basket of goods or services purchased by producers.
The producer price index (PPI)
500
Labor force participation rate (LFPR)=
LFPR =
(Labor Force / Population) X 100
500
The Natural Rate of Unemployment rate and types of unemployment included.
NRU = 4-6%
Structural and Frictional Unemployment
500
The 2 of the 3 costs of inflation
1. Menu Costs (costs money to change listed prices)
2. Shoe Leather Costs (the costs of transactions increase)
3. Unit of Account Costs (Money does not reliably measures the value of goods/services)
500
Economists collect statistics on production, income, investment, and savings.
What is national income accounting?
500
Zoltar can produce either 2 tons of grain or 4 cars with 10 units of labor. Atlantas can produce either 5 tons of grain or 25 cars with 10 units of labor.
Who has the comparative advantage in producing grain?
Zoltar has a comparative advantage in the production of grain because Zoltar had a lower opportunity cost in producing grain.
500
The current inflation rate in the U.S.
2.5% (as of 10-2024)
NOTE: Double check before game day!