Final Exam (Macroeconomics) Flashcards
(19 cards)
Macroeconomics
the study of economics from the perspective of a country
Purpose of Macroeconomics
Promote Prosperity and Avoid Decline
GDP
- Gross Domestic Product
- indicator of the economic prosperity of a country
- the sum of the value of all the goods and services generated in a country over a year (typically)
Expenditure Method
GDP Formula
C + G + I + Net Exports (Ex - Im)
C
Private Consumption
G
Government Spending
I
Investment
Income Method (GDP i)
The sum of income generated from the sale of goods and services (includes profits, wages, interest earned, and rents.)
Real GDP
term used to describe GDP after factoring out inflation impacts
GDP is a measure of (productivity/wealth)
PRODUCTIVITY
Aggregate Supply and Demand
Supply curve that indicates the sum of all supply curves
Demand curve that indicates the sum of all demand curves
Equilibrium Point for (AS and AD)
Indicates the GDP of the country
Recession
GDP declines for two quarters in a row
Depression
GDP declines for a lot longer than two quarters in a row
Result of Recession or Depression
Low Productivity
High Unemployment
Capital becomes less available
Economic Quality Declines
Unemployment Rate
percentage comparing the number of people who cannot find a job with the number of people who are working or seeking to work
Ex - 100 people want to work –> 93 people (employed) –> 7 people have not found a job –> 7% unemployment rate
Participation Rate
The measure used to calculate the percentage of working-age people who actually want to engage in work
- Sum of People who are working or seeking to work / Working Age Population
Inflation
Buying power of money is reduced because extra money has been added to the system
Money Supply grows faster than productivity
Macroeconomic Cycle / Circular Flow Model
A way to help understand the inter-relationship of a large variety of factors in a national economy
