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Economics Test 3

Terms in this set (46)

Recession
A decline of GDP over two consecutive quarters
GDP
The total markedr value if all final goods and services produced within the political boundaries of an economy during a given period of time, usually one year.
Aggregate Expenditure
National Income (GDP)
Final Goods are
Meant for final consumption
Capital goods (goods to produce final goods)
Not resold
Goods that in the production process do not directly become part of the value chain
National Income (GDP) =
C + I + G + (X-M)
An orange turned into orange juice is
And intermediate good
C+I+G+(X-M)
Consumption
Investment
Government
Export
Import
Consumption
Durable goods (a personal computer)
Non-durable goods (a burger)
Services (a doctor's visit)
Investment
Business investment (office buildings, supplies)
Residential construction
Changes in inventories
Government
Spending on governmental administration (military tech, salaries)
Government spending does NOT include
Social security
Interest payments on public debt
Exports
Foreign countries' expenditures on goods and services produced in home country
Exports are an inflow of income
Imports
Domestic expenditures on goods and services produced abroad
Imports are a leakage of income
GDP does NOT measure
The informal economy (drugs, prostitution, gambling)
Environmental degradation
Household production
Quality of leisure
Intermediate good
Good used in the production process that is not a final good or service
Consumption expenditures (C)
Purchases of newly produced goods and services by households
Private investment expenditures (I)
Purchases of newly produced goods and services by firms (spending on new plants and equipment)
Net export
Exports minus imports (NX)
Trade deficit
The excess of imports over exports
Trade surplus
The excess of exports over imports
Y
C+I+G+NX
Real GDP
The value of GDP computed using prices from an arbitrary base year(a measure of GDP that controls for changes in prices, since across different periods goods/services are valued at common, constant prices)
Nominal GDP
The value of GDP computed using current period prices
Real GDP per capita
Value of real GDP divided. H total population of the country
Inflation rate
The rate at which the overall price level increases on an annual badis
Deflation
A general decrease in the level of overall prices (realization of a negative inflation rate)
Hyperinflation
Extremely high inflation rate generally over 100% per year
Misery index
Economic indicator created by Arthur Okin. Calculated by adding together the annual inflation rate and the unemployment rate
Unemployment rate
Percentage of the labor force that is currently unemployed
The great inflation
Period of abnormally high inflation rates from early 70s-early 80s
Which of the following would be included as a member of the labor force?
a recent high school graduate looking for a first job
which of the following people would be considered unemployed?
a recent high school graduate looking for a first job
which one of the following persons would NOT be considered unemployed?
a construction worker who has given up looking for work after 18 months without a job
the labor force participation rate measures the number of people
in the labor force as a percentage of the population at least 16 years old
unemployment caused by a recession is called
cyclical unemployment
frictional unemployment often occurs when
people lose a job because their skills are no longer needed
workers at a steel plant are laid off because the economy is weak and the demand for products requiring steel has fallen. what type of unemployment best describes the workers' situation?
cyclical unemployment
which of the following types of unemployment is considered to be the most controllable through macroeconomic policy?
cyclical unemployment
Suppose more men wanted to stay at home and raise their pre-school aged children. we would expect:
the labor force participation rate for males to decrease
the total population of page land is 48 million. of this total, 4 mill are unemployed and 36 mill currently hold jobs. what are the rates of unemployment and labor force participation of page land?
rate of unemployment is 10% and labor force participation rate is 83%
which of the following are consequences of unemployment?
a decline in output and income
the price index used to calculate most cost-of-living adjustments is the:
consumer price index
the consumer price index is computed by comparing the cost of the typical market basket of goods purchased during a base year (evaluated at base year prices) with:
the cost of the current market basket evaluated at base-year prices
a price index in years after the base year:
can be less than, greater than, or equal to 100
if the CPI increased from 80 to 84, the rate of inflation is:
5 percent
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