GDP & Economic Growth
What are the Three Macro Economic Goals
Economic Growth Low Unemployment and Price Stability
How is unemployment rate calculated
Unemployed / Labor force x 100
Define Inflation
A general increase in overall price levels
Define fiscal Policy
Government changes taxes and spending to influence the economy
What is a disadvantage to bartering
requires a double coincidence of wants
What does GDP measure
What is the total amount of goods and services produced in a country in a year.
Name the three types of unemployment
Frictional structural and Cyclical
Who is hurt by unanticipated inflation
Lenders fixed incomes and savers
What is expansionary fiscal policy used for
Fighting a recession increasing GDP
Name the three functions of money
Medium of change Store of value unit of account
Name two things that are not included in GDP
Used goods, Illegal Goods financial transactions household production.
Why is full employment never 0%
There will always be frictional and structural unemployment
What is the difference between nominal and real wage
Nominal - Money Wage Real actual wage
What is the difference between a deficit and the national DEBT
Deficit = Yearly short fall Debt = total owed
What is the purpose of the FED Reserve
To regulate the money supply and stabilize the financial system
What are the four components of GDP
Consumption Investment Government Spending Net Exports
What is one major criticism of the unemployment rate
It does not count discouraged workers or underemployed workers
What is Consumer Price Index used to measure
The cost of goods over time (Inflation on those goods)
Name a lag in the fiscal policy
Recognition lag Decision Lag and Implementation lag
How does the FED increase the money supply
By buying Bonds Open Market Regulations
Why does GDP Per Capita a better measure of standard of living than GDP
It accounts for population size and shows the average output per person
Name 4 phases of the business cycle
Expansion Peak Contraction (recession) Trough
What is the difference between Real and Nominal GDP
Real GDP adjust for inflation Nominal Does not
Name two types of spending that lend to long term growth
infrastructure education technology
Define Open Market Regulations
The Buying and selling of government bonds by the FED