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Macro Economics > Midterm 1 > Flashcards

Midterm 1 Flashcards

(61 cards)

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1
Q

GDP

A

Is the market value of all final goods / services produced in a country in a given time

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2
Q

4 parts of -GDP

A

Market value
Final goods
Produced within a country
Specific time period

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3
Q

Why is GDP gross

A

Before deductions

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4
Q

GDP = (2)

A

Total expenditure on final goods

Total income

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5
Q

Households sell and firms buy the services of ___, ___, and ____ in factor markets

A

Labor
Capital
Land

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6
Q

Firms pay ___ to households

A

Income

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7
Q

Consumption expenditure

A

Total payment for consumer goods

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8
Q

Calculate unsold inventory as if what

A

The firm bought it themselves

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9
Q

The purchase of new plant, equipment, buildings and additions to inventories are what

A

Investment

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10
Q

Government expenditure

A

Gov buys goods from firms

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11
Q

Financial transfers are part of the circular flow chart (T or F)

A

False

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12
Q

Net exports = X - M

A

Exports - imports

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13
Q

The expenditure approach - GDP =

A

Consumption expenditure + investment + gov expenditure + exports - imports

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14
Q

Income approach - GDP = ____ + ____ + ____ + ____ - _____

A

Wages + OFI + depreciation + tax - subsidy

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15
Q

Wages = ____ + ____

A

Gross wages * benefits

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16
Q

The sum of all factor incomes (W + OFI) =

A

Net domestic income at factor cost

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17
Q

Real GDP

A

Value of final goods produced in a given year when valued at the prices of a reference year

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18
Q

Nominal GDP

A

Is the value of goods produced during a given year valued at prices in that same year

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19
Q

Real GDP per person = ____ / ____

A

Real GDP / population

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20
Q

Potential GDP

A

The value of real GDP when all the economy’s labor, capital, land and entrepreneurial ability are fully employed

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21
Q

Expansion

A

GDP increases from a trough to peak

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22
Q

Recession

A

Real GDP decreases and growth rate is negative for 2+ successive quarters

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23
Q

Why worry about unemployment (3)

A

Lost incomes
Production loss
Lost human capital

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24
Q

Labor force is divided into two groups:

A

The working age population

Too young to work (<15)

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25
Working age is divided into 2 groups
People in the labor force | People not in the labor force
26
Employed are divided into two groups
Full time | Part time
27
Part time is divided into two groups
Voluntary | Involuntary
28
To be identified as unemployed: (3)
Made specific efforts to find a job within previous 4 weeks Waiting to be called back to job they were fired from Waiting to start a new job within 4 weeks
29
Unemployment rate = ______ / _____ X 100
Unemployed | Labor force
30
Involuntary part time = ___ / _____ x 100
Involuntary part time | Labor force
31
Labour force participation = ___ / ____ x 100
Labor force | Working age population
32
Employment to population = ___ / ___ x 100
Employment | Working age population
33
Most costly unemployment
Long term unemployment
34
Marginally attached workers
Is a person who currently is neither working nor looking for work but has indicated that they want are are available for a job and has looked for work in recent past
35
Discouraged worker
Someone who has stopped looking for a job due to repeated failure
36
Frictional unemployment
Arises from normal labour market turnover
37
____ unemployment is permanent and healthy for a growing economy
Frictional
38
Structural unemployment
Is created by the changes in technology and foreign competition that changes the skills needed to perform jobs or location of jobs
39
Cyclical unemployment
Is the higher than normal unemployment at a business cycle trough and lower than normal unemployment at a business cycle peak
40
Natural unemployment
Arises from frictions and structural changes when there is no cyclical employment
41
Potential GDP
Quantity of real GDP that would be produced at full employment
42
Output gap = ____ - ____
Real GDP - potential GDP
43
Inflation
Rising price level
44
Deflation
Falling price level
45
Consumer price index
Measures the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
46
CPI = ___ for the reference base period
100
47
CPI = ____ / ____ x 100
Cost of basket at current period prices Cost of basket at base period prices
48
Inflation rate = (_____ -_____ ) / ____ x 100
CPI this year - CPI last year / CPI last year
49
CPI might overstate the true inflation rate for 4 reasons :
New goods bias Quality change bias Commodity substitution bias Outlet substitution bias
50
GDP deflator = ____ / ____ x 100
Nominal GDP Real GDP
51
Chained price index for consumption = ____ / ____ x 100
Nominal consumption expenditure Real consumption expenditure
52
Real wage rate = ____ / ____ x 100
Nominal wage rate GDP deflator
53
Economic growth
Sustained expansion of production possibilities which is measured as the increase in real GDP over a given period
54
Annual _____ is used to measure economic growth
Percent change in GDP
55
Rule of 70
Number of years it takes for the level or a variable to double is approx. 70% annual % growth rate
56
Rule of 70 ex. A variable grows at 7% a year doubles in
10 years
57
Aggregate production function
Tells us how real GDP changes as the quantity of labour changes
58
Increase in labour = ___ in real GDP
Increase
59
Labour market equilibrium
Labour demanded = labour supplies
60
Potential GDP is the quantity of real GDP produced when what
Economy = full employment
61
Aggregate hours
Total number of hours wired by all people employed

Macro Economics (1 decks)

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