Understanding GDP
What is the definition of GDP?
GDP is the total dollar value of all final good and services produced within a country's borders in one year.
what is cyclical unemployment?
Cyclical unemployment is linked to the business cycle and increases during recessions.
What is inflation?
Inflation is a sustained increase in the general price level that reduces the purchasing power of money.
What is M1 in the money supply?
M1 represents the most liquid forms of money, including cash and checking accounts.
Harry Potter and the Order of the Phoenix
What are final goods and services?
Final goods and products that are ready for consumer purchase and use, while services are non-physical products like haircuts or education.
Describe structural unemployment.
Structural unemployment is caused by economic shifts like new technology that replace jobs or create a skills gap.
How does inflation affect purchasing power?
As prices rise and income remains the same, the purchasing power of consumers declines.
What song by Justin Timberlake became a major hit in 2006?
SexyBack
what does GDP omit in its calculations?
GDP omits illegal transactions, unrecorded transactions, household work, used goods, financial transactions, and government transfers.
What is frictional unemployment?
Frictional unemployment is temporary unemployment during job transitions, often due to voluntary job searches.
What is the wage-price spiral?
The wage-price spiral is a cycle where rising wages lead to higher prices, which in turn leads to demands for even higher wages.
Explain the concept of fractional reserve banking.
Fractional Reserve Banking means that banks keep only a fraction of deposits on hand and lend out the rest, allowing them to create money.
What two gaming consoles were released in 2006?
Wii and PlayStation 3
How is GDP calculated using the expenditure approach?
GDP is calculated using the formula C+I+G+NX, where Cis consumer spending, I is business spending, G is government spending, and NX is net exports.
What are the characteristics of seasonal unemployment?
Seasonal unemployment occurs due to changes in seasons or weather. affecting industries like agriculture and construction.
What are the three theories explainin the causes of inflation?
The three theories are Quantity Theory, Cost-Push Theory, and Demand-Pull Theory.
What is the difference between simple and compound interest?
Which young adult novel, part of a series by Stephenie Meyer, was published in 2006?
New Moon
What is the difference between GDP and GNP?
GDP focuses on the location of the production within a country, GNP focuses on the production by the citizen of a country, regardless of location.
How does underemployment differ from unemployment?
Underemployment refers to individuals working below their skill level or working part-time involuntarily, while unemployment means actively seeking work but not having a job.
What are the negative effects of deflation?
Deflation can lead to uneven price drops, business failures, and job losses as companies struggle with reduced revenue.
Describe the role of financial intermediaries.
Financial intermediaries, like banks and credit unions, channel funds from savers to borrowers, facilitating economic activity.
Which event marked the beginning of the financial crisis in 2006?