Module 2 Flashcards
(91 cards)
1
Q
Depression
A
A deep and prolonged downturn
2
Q
Rescission
A
Short pweriods where the economy is falling (from a peak down to a trough)
3
Q
Expansion
A
When the economy is in an upturn, (the distance from a trough to a peak)
4
Q
Employment
A
Number of people with a paid job
5
Q
Unemployment
A
Number of people without a job
6
Q
Labor force
A
The sum of the employed and unemployed
7
Q
Output and unemployment are ____________ related
A
Inversely
8
Q
Aggregate output
A
The economies total production of stuff for a given time.
9
Q
Inflation
A
A rise in the overall price of everything
10
Q
Deflation
A
A decrease in the price of everything
11
Q
Disinflation
A
When the rate of inflation is getting smaller, (note, still inflating)
12
Q
Full employment on graph
A
The strait line
13
Q
Peak (graph)
A
The maximums
14
Q
Trough (graph)
A
The minimums
15
Q
3 economic goals
A
- Promote economic growth
- Limit unemployment
- Keep prices stable
16
Q
National income and product accounts
A
Keeps tract of flows of money among different people
17
Q
Stocks
A
A share of the ownership of a company
18
Q
Bonds
A
A loan in the form of an IOU
19
Q
Final goods and services
A
Goods and services sold to final user
20
Q
Intermediate goods and services
A
Bought by firms as inputs for the production of final goods
21
Q
GDP equation
A
GDP= C+I+G+X-IM
22
Q
C
A
Consumer spending
23
Q
I
A
Sales of investment goods
24
Q
G
A
Government purchases
25
X
Exports
26
IM
Imports
27
Is consumer spending included in GDP
Yes
28
Is investment spending counted in GDP
Yes
29
Is government purchases included in GDP
Yes
30
Are net exports included in GDP
Yes
31
Are intermediate goods in GDP
No
32
Financial assets and transfer payments in GDP
No
33
Are inputs in production included in GDP
No
34
Are foreign goods included in GDP
No
35
Are used goods in GDP
No
36
GDP per capita
GDP divided by population
37
Nominal GDP
Total value of all goods and services produced in an economy in a given year, with current prices
38
Real GDP
Total value of all goods and services produced in an economy in a given year, with base year prices
39
Four components of income
1. labor income
2. Rental income
3. Interest income
4. Profit
40
Employed
People currently holding a job in the economy
41
Unemployed
People with no work but looking for it
42
Labor force
Sum of employed and unemployed
43
Low unemployment means
It's easy to find jobs
44
High unemployment means
It's hard to find jobs
45
Discouraged workers
Not working, but given up on job search due to market
46
Marginally unemployed workers
Those who want a job, but looked in past and gave up now
47
Underemployed workers
Overqualified workers or workers who want more hours
48
Unemployment ________ during recessions
Rising
49
Unemployment ________ during expansions
Falls
50
Frictional unemployment
Unemployment due to time in apt he job search
51
Structural unemployment
Unemployment due to a lack of necessary skills
52
Minimum wage
Government mandated price floor on wages
53
Labor unions
Work together to gain higher minimum wages
54
Efficiency wages
Wages employers set above equilibrium as an incentive for better performance
55
Natural rate of unemployment
Rate that arises from effects of frictional plus structural unemployment
56
Cyclical unemployment
When there are not enough jobs for those who want them.
57
Actual rate of unemployment
Natural + cyclical rate of unemployment
58
Real wage
Wage rate divided by price level to adjust affects of inflation
59
Real income
Income divided by price level to adjust for income
60
Inflation rate
Percentage increase in price from year to year.
61
Inflation rate formula
(Year 2-year 1)/year 1
62
Shoe leather costs
Increased costs of transactions due to inflation
63
Menu costs
The cost of changing prices listed on a menu
64
Unit of account costs
Arises because money is a less reliable source of payment
65
Unexpected inflation
Borrowers benefit lenders lose
66
Unexpected deflation
Borrowers lose, lenders benefit
67
Nominal interest rate
Rate actually paid for a loan
68
Real interest rate,
Nominal interest rate minus the rate of inflation
69
If deadpool has a nominal interest rate of 6% but inflation rate is 3% what is his real interest rate
3%
70
Savers _______ with inflation
Lose
71
Spenders _____ with inflation
Win
72
Calculate nominal GDP
Cost of good times amount of it
73
Calculate real GDP
Cost of good (of a base year) times the quantity of the good in a current year
74
CPI calculations.
Take the nominal GDP of a current year and divide it by the previous. Multiply this by 100:)
75
Calculating inflation rate based on nominal GDP
Year 2- year 1 over year 1 x 100
76
Aggregate price level
A measure of the overall price of goods in an economy
77
Market basket
A hypothetical set of consumer goods and purchases
78
Price of a market basket is gotten by
Adding... Yup... Just adding
79
Price index
Cost of market basket in current year divided by cost of a market basket in base year
80
CPI
Consumer price index: measures the cost of s market basket in a typical urban family
81
Why inflation isn't always accurate, and what it makes it so that spending x amount of money is nesisary To be just as happy
1. People's tastes change (choose different goods)
2. We buy improved versions(get more for more)
3. Innovation makes inflation an overstatement
82
PPI
Measures the price of goods and services purchased by a producer
Responds to inflation faster
83
GDP deflator
Nominal /real x100
84
3 causes of inflation
1. Gov prints too much money
2. Demand pull
3. cost push inflation
85
Demand pull
Too much money in market. Makes goods cost more
86
Cost push inflation
Cost of resource drives prices
87
Quantity of money theory
MV=PY
88
M
Money
89
V
Velocity of money
90
P
Price level
91
Y
Quantity of output
