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Command System

government ownership, decisions made by a central planning board.

Market system

private ownership of resources, decisions based on market.

Gross Domestic Product

GDP stands for

Gross Domestic Product

total market value of final goods and services produced in a given period of time.

Retained Earnings

When corporate retains profit to use in future.

Personal disposable income (PDI)

after-tax income

Nominal GDP

current prices; no adjustment for inflation

Real GDP

GDP in constant prices, or price at base year

Recession

Real GDP decreases from one year to the next.

financial shock, political event/world event, or reduction in spending

Causes of recession

inflation

increase in greneral (average) level of prices

demand-pull inflation and cost-push inflation

the 2 causes of inflation

Demand-pull inflation

type of inflation where there is too much spending chasing too few good. happens if economy is strong.

cost-push inflation

type of inflation where the cost of production goes up and pushes all other prices up.

those over the age of 65 and under the age of 16, those in the military, those in jail, full time students, and home-makers.

labor force excludes...

frictional, structural, and cyclical

the 3 types of unemployment are...

frictional unemployment

voluntarily unemployeed, or inbetween jobs.

structural unemployment

not voluntary unemployment. Do not have skills necessary for unemployment. Lorg-term.

Cyclical unemployment

unemployed because the economy is weak.

an economic system

a set of arrangements and a coordinating mechanism.

the natural rate of unemployment

the rate of unemployment occurring when the economy is in short-run potential.

Real GDP

find the strength or weakness of an economy by looking at...

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