Economic Chapter 3 section 2

Macroeconomic

the study of the behavior and decision making of entire economies

GDP is measured in ________ not ________

Dollar terms, physical units

One way is through the American work _____

Ethic

Nonproduction transactions are ______ from GDP

Excluded

A business cycle is a period of macroeconomic _______ followed by a period of _______ or declines

Expansion, contraction

4 main parts of a business cycle

Expansion/recovery, Peak, Recession, Trough

Examples of GDP

Financial transactions and sales of items produced in previous periods

________ are subject to business cycle because economic decisions about factors such as prices, production and consumption are made by individuals and business action in their own self interest

Free enterprise systems

Policy makers pursue 3 main outcomes as they seek to stabilize the economy:

High/full employment Steady growth Stable prices

The American economy maintains a ____ standard of living, GDP Terms, than most of the world

Higher

Example of macroeconomics

Individuals, families, business, specific markets

The government provides incentives for ___

Innovation

________ products, or components of final goods and services, are excluded to avoid counting

Intermediary

Gross domestic product

The total value of all final goods and services produced in a particular economy in a year

Macroeconomics examines major ______ for the economy as a whole

Trends

A business cycle is a pattern of _____ and _____ movement of GDP over several years

Upward, downward

The value of intermediary products is already represented in the _____ of the final products

Value

Economist use GDP as one measure of an economy's __________

Well being

Business cycle

a period of macroeconomic expansion followed by a period of contraction

Work ethic

A commitment to the value of earth and purposeful activity

Recession

A decline in total output, income, employment, and trade; GDP decreases for at least two quarters in a row

Peak

Business activity reached maximum with full employment and near capacity output; GDP expansion ends, recession starts

GDP helps economists to predict ________

Business cycles

Improvements in technology allows an economy to produce ____ output from the same or a smaller quantity of ____ or resources

More, inputs

Innovation can make some production processes and workers out of date or ____

Obsolete

Expansion/ recovery

Output and employment are expanding toward full employment level; GDP increases

The government offers innovators an incentive through ____ and copyright protection

Patent

Troughs

Recession ends, expansion starts

Improved _____ is another way to increase productivity

Technology

Technology

The process used to produce a good or service

Microeconomics

The study of the economic behavior and decision making of small units