Ap macro
circular flow diagram
The market for factors of production connects spending by firms to household income.
recessionary gap
When an economy is at the trough of the business cycle
cyclical unemployment
people who are not working due to a lack of demand or downturn in economy
Disinflation
slowdown in the rate of increase in the consumer price index or inflation.
output gap
the gap between real GDP and potential GDP
inflation rate
the percentage increase in the price level from one year to the next
Real GDP
the production of goods and services valued at constant prices
Nominal GDP
the production of goods and services valued at current prices
Which statement is true about the approaches used to measure the value of a nation's gross domestic product (GDP
to calculating GDP sums consumption spending, investment spending, government spending, and net exports.
cyclical unemployment rate
unemployment rate - natural unemployment rate
structural unemployment
unemployment that mismatches between jobs openings and job seekers. unemployed people who lack skills or do not have sufficient education.
frictional unemployment
unemployment that occurs when people are just graduating and looking for jobs, or may had quit to find another job
Inflation Rate Formula
(Price index in year 2 - price index in year 1)/(Price index in year 1) x 100
CPI
(consumer price index) a measure of the overall cost of the goods and services bought by a typical consumer
Inflation
A general and progressive increase in prices
Deflation
A situation in which prices are declining
GDP per capita
GDP divided by population
What is true about gdp
Calculations of GDP include the unsold inventories of goods produced within the borders of the country.
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
Real GDP formula
Nominal GDP/GDP Deflator x 100
real wage equation
nominal wage/CPI x 100
labor force
employed + unemployed
natural rate of unemployment formula
frictional unemployment + structural unemployment
Limitations of GDP
income inequality. pollution home labor stay at home parents volunteer workers
discouraged workers
individuals who would like to work but have given up looking for a job
labor force participation rate formula
labor force/population x 100
actual unemployment rate
natural unemployment + cyclical unemployment