0014 Aggregate Economic Behavior of the American Economy (SMR 5.5) Flashcards Preview

CSET Social Science Subtest #3 > 0014 Aggregate Economic Behavior of the American Economy (SMR 5.5) > Flashcards

Flashcards in 0014 Aggregate Economic Behavior of the American Economy (SMR 5.5) Deck (17)
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1
Q

What is an aggregate economy?

A

Full measurement of an economy

2
Q

How do we measure economic performance in an aggregate economy?

A

GDP
Price Index
Interest Rate

3
Q

What is the GDP?

A

Gross Domestic Product: total value of goods and services produced in a year inside a nation’s borders (various methods of measuring), largest measure of nation’s income

4
Q

What does it mean when we say Real GDP?

A

That it has been adjusted for inflation

5
Q

What is the Price Index?

A

Changes in prices of certain goods and services in a period of time, usually done monthly and tells us whether we’re experiencing inflation or a recession, determines interest rates

6
Q

What is the Consumer Price Index?

A

Change in prices of consumer goods (selected products and services)

7
Q

What does the Interest Rate measure?

A

It measures the supply of money in the economy

8
Q

The interest rate is often taken as a tool of both measuring and _____ the supply

A

Controlling; interest rates changes based on the supply of money and this can be controlled by the Federal Reserve

9
Q

What is the Market Interest Rate?

A

Set up by demand and supply of money available for loans, banks determine what the interest rate will be based on money coming in and loans going out

10
Q

What are National interest rates?

A

Short term interest rates controlled through the federal reserve’s ability to buy and sell treasury securities

11
Q

What happens if the Fed sells bonds?

A

It decreases the supply of money and interest rates go up

12
Q

What happens if the Fed buys bonds?

A

It increases the supply of money and interest rates go down.

13
Q

How do lower interest rates help to stimulate the economy?

A

because the lower interest rates are, the more people will travel, buy homes, buy cars, etc.

14
Q

What are the three types of unemployment?

A

Frictional
Structural
Cyclical

15
Q

What is frictional unemployment?

A

the time period between jobs, when a worker is searching for, or transitioning from one job to another.

16
Q

What is structural unemployment?

A

unemployment caused by lack of demand for a worker’s specific type of labor.

17
Q

What is cyclical unemployment?

A

unemployment due to recession