Upgrade to remove ads
Terms in this set (89)
Recurring ups and downs in the level of economic activity.
The phase in the business cycle characterized by high production (real GDP), full unemployment, and inflation.
An increase in the overall level of most prices in an economy., the percentage increase in the price level from one year to the next
The highest point in an economic expansion.
The phase in the business cycle characterized by declining levels of real GDP, moderating rates of inflation, and emerging levels of unemployment.
The lowest point in an economic contraction. Real GDP stops falling at this point.
The phase in the business cycle characterized by a period of decline in the level of output, employment, and income lasting six or more months. Prices may fall.
Severe, deep, and long lasting recession.
The phase in the business cycle characterized by a period of increasing real GDP and decreasing rates of unemployement. Follows a recession.
The upward-sloping shape of the trend line shows economic growth from peak to peak. If an economy is not growing, the trend line would be horizontal.
Gross Domestic Product
GDP - Gross Domestic Product is the total dollar value of all goods and services produced, in final form, within the domestic borders of the United States, regardless of the national origin of the producing firm.
A measure of GDP in which the quantities produced are valued at current-year prices; measure current dollar value of production. Nominal GDP has not been adjusted for inflation.
GDP that has been adjusted for price changes; GDP measured in base-year, or constant, prices. Real GDP has been adjusted for changes in the price level (adjusted for inflation.)
Consumer Price Index
CPI - The Consumer Price Index is an index number measuring the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics.
The year serving as a point of comparison for other years in a price index.
A measure of the average prices of goods/services in one year expressed in realtions to prices in the base year.
A measure of the level of prices of all final goods and services (consumer goods, investment goods, and government) produced by the economy in a base year. Nominal GDP/Real GDP X 100
The level of real GDP and the price level at which aggregate quantity demanded equals aggregate quantity supplied.
A period of slow economic growth and high unemployment (stagnation) while prices rise (inflation). Prevelent during the 1970's and 1980's.
A model that shows the process of exchange among consumers (also called households), businesses and government.
The total or sum of all monies spent to purchase aggregate output. One of two ways to calculate GDP.
The total or sum of all income earned in the production of GDP. One of two ways to calculate GDP.
Goods to be sold to the consumer for final use, these goods are not for resale.
Goods used in the production of other goods. Using intermediate goods in calculation of GDP would cause double counting, overstating the value of GDP.
The difference between the value of the products produced by a firm minus the value of the products (materials) purchased and used by the firm to produce the product....market value a firms adds to a product
C + I + G + NX
Formula used to calculate the expenditures approach. GDP = Y
Personal Consumption Expenditures
C = Personal Consumption Expenditures - spending by households on goods and services.
Gross Private Domestic Investment
I = Gross Private Domestic Investment - total investment by businesses on plant, equipment, and inventory goods before depreciation.
D = deprecation - to decline in value. The allowance for worn out or used up capital. It is a charge against total business receipts for the year.
G = Government Spending (or purchases) - all goods and services bought by government.
nx = Net Exports - the difference between a country's exports minus its imports.
Goods produced in one country and sold to another country. Goods leaving the country of domestic origin.
Goods produced in another country and bought by another country. Goods coming into a country which were produced elsewhere.
Goods expected to last a year or longer.
Goods expected to last less than a year.
Net Private Domestic Investment
In = Net Private Domestic Investment - total business investment (Ig) minus depreciation (D). Ig - D = In
If Net Investment (In) is positive, the economy is growing or expanding.
If Net Investment (In) is zero, the economy is static or not changing. The economy is adding new capital at a rate just fast enough to replace what is being worn out or used up. This situation occurred during World War II in the United States.
If Net Investment (In) is negative, the economy is declining. Net investment in this economy is negative. The economy is producing less than what is being used up during the year. This occurred in the United States during the Great Depression.
NI = National Income - all income earned by American-owned resources, whether located here or abroad. NI = Compenstation of Employees + Rent + Interest + Profit
Compensation of Employees
Income earned from providing labor to businesses. Compensation of Employees = Wages and salaries + wage and salary supplement.
Income earned from renting property to others, including land, housing, and office space.
Income earned on gains from financial investments.
Profit includes: Proprietors' Income and Corporate Income
Gross National Product
GNP = Gross National Product - the total dollar value of all goods and services produced, in final form, by United States firms, no matter where these firms are located worldwide.
Net Domestic Product
NDP = Net Domestic Product. NDP is GDP adjusted for depreciation. GDP as a measure of total output gives an exaggerated sense of output. NDP = GDP - D
Income received, but not earned, including (but not limited to) unemployment insurance, veterans benefits, Temporary Assistance to Needy Families, and subsidies to farmers.
DI = Disposable Income. DI is personal income minus personal income taxes. DI = PI - PITS
Unemployment due to constant changes in the economy that prevent qualified unemployed workers from being immediately matched up with existing job openings. It results from imperfect information and search activities related to suitably matching employees with employers.
Unemployment due to recessionary business conditions and inadequate labor demand, caused by downturns in the business cycle.
The long-term and chronic unemployment that exsists even when the economy is producing at a normal rate. These are workers who have lost their jobs because of changing market (demand) conditions and whose skills do not match the requirement of available jobs. Unemployment that arises when the skills of available workers do not match the requirements of a available jobs.
Those people not included in the official measures of unemployment because they have stopped actively searching for work. They are no longer part of the civilian labor force.
Those people who are employed but not in jobs that utilize their skills and talents to the greatest extent.
Natural Rate of Unemployment
The "normal" unemployment rate due to frictional and structural conditions in labor markets. It is the unemployment rate that occurs when the economy is operating at a sustainable rate of output.
The employment level at which actual employment rate equals the natural rate of unemployment.
spending by households on goods and services not including spending on new houses
spending by firms on new factories offices ect
buying/selling of goods/services thats concealed from government to avoid taxes/regulations or because the goods and services are illegal
sum of employed and unemployed workers in economy
a higher-than-market wage that a firm pays to increase worker productivity.
producer price index
an average of the price received by producers of goods and services at all stages of the production process
nominal interest rate
the interest rate as usually reported without a correction for the effects of inflation
real interest rate
the nominal interest rate minus the inflation rate
the costs to firms of changing prices
law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
the change in quantity demanded because of the change in the relative price of the product
a change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product's price.
all other things held constant
two goods that are bought and used together.
the characteristics of a population with respect to age, race, and gender.
the amount of a good or service that a firm is willing and able to supply at a given price
law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs
competitive market equilibrium
a market equilibrium with many buyers and many sellers
a legal maximum on the price at which a good can be sold
a legal minimum on the price at which a good can be sold
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
the amount a seller is paid for a good minus the seller's cost of providing it
the sum of consumer surplus and producer surplus.
a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.
the reduction in economic surplus resulting from a market not being in competitive equilibrium.
effects of tax on gasoline
shift up in supply curve, raising price to consumers, lowering price sellers receive.
effect of tax on cigarettes
supply shift up, sellers get less, consumers pay more. government will receive tax, some cs and some ps. deadweight loss will exist
the actual division of the burden of a tax between buyers and sellers in a market
effect of rent ceiling
Qs of apartments falls, Qd rises. PS little rectangle (rhombus is top part), dw loss equilateral triangle
effect of price floor on wheat
CS transferred to producers little rectangle, (rhombus bottom). surplus.
the number of unemployed people divided by the labour force
labor force participation rate
labor force/ population
a higher-than-market wage that a firm pays to increase worker productivity.
This set is often in folders with...
MacroEcon 106 Midterm T/F
BUS 151 MidMichigan Community College Ch. 13 - 16
Macroeconomics Exam II
You might also like...
Unit 2 Econ
AP Macroeconomics Unit 2
Economics AP TAG- Unit 2 Vocabulary Terms
AP Economics Unit 2 Vocabulary List
Other Quizlet sets
Skills GI&ET #3
comparative religion lessons 7-12
17. Legal liability
Dec 6: Integrated Regulation of Vascular…