Unit 4: Economic Indicators

What acronym is used to describe things excluded from GDP?

"IT'S FUN"

When does a recession turn into a depression?

"when your neighbor loses their job it is considered a recession,but if you lose yours as well, it is considered a depression."

How do u calculate CLF?

# of employed people + # of employed people

How do you find inflation rate?

(( (CPI in the last year) - (CPI in the earlier year) / CPI in the earlier year )) x100

Increasing prices in the United States encourage Americans to buy more foreign goods will decrease what GDP sector?

(Exports-Imports) sector

Name the three characteristics of a Depression.

1. Acute 2. High rates of Unemployment 3. idle resources

What are the four changes in the business cycle?

1. Business expectations of the future 2. Innovation and imitation 3. Changes in saving and spending 4. External forces

What are the three basic economic indicators?

1. GDP 2. inflation 3.unemployment

If GDP "has not" been a judged for inflation; it will be called:

1. GDP 2. Nominal GDP 3. Current GDP

If GDP "has" been adjusted for inflation; it will be called:

1. real GDP (used the most) 2. GDP in constant dollars 3. GDP in changed dollars

What are price indices?

A price average for a given group of goods and services during a given period of time.

What is the consumer price index?

A report on the price changes for about 90,000 of the most commonly-used items in The United States

What is a base year?

A year against which all other years will be compared

What is GNP?

All final goods and services made in a single year produced by a nation's companies

What is another name for technological unemployment?

Automation

Who were the baby boomers?

Babies born between 1946-1964

How is GDP calculated?

C + I + G + (X-M) Consumer Spending + Business Investments + Government Spending + (Exports-Imports)

What makes up 72% of the United States GDP?

Consumer sector/spending

What is the economic definition of shocks?

Events that were not expected that send the economy into a recession. ex//(war,weather,virus)

How often does the government collect data on population?

Every 10 years

What does the "F" in "IT'S FUN" stand for?

Financial assets (stocks and bonds)

If spending goes down, what happens to GDP and unemployment?

GDP goes down; unemployment goes up

If spending goes up, what happens to GDP and unemployment?

GDP goes up; unemployment goes down

What happens to GDP during a recession?

GDP is decreasing

What happens to the GDP during a recovery?

GDP is increasing

What are exports?

Goods made in The United States and are sold to other countries.

What are imports?

Goods made in another country ,but sold to The United States.

What makes up 17% of the United States GDP?

Government sector/spending

Worried about an increasing budget deficit, the government decided to buy few military planes which decreases what GDP sector?

Government spending sector

What does GDP stand for?

Gross Domestic Product

What does GNP stand for?

Gross National Product

Are borrowers hurt or helped during inflation?

Helped

Hurt or helped by inflation: borrowers

Helped

Hurt or helped by inflation: customers in a contract

Helped

"A state government receives revenue mainly from an income tax" was the state government hurt or helped during inflation? Why?

Helped; income increases with inflation

What is a peak?

Highest point of a wave

Hurt or helped by inflation: businesses in contracts

Hurt

Hurt or helped by inflation: inflationary periods (lenders)

Hurt

Hurt or helped by inflation: people engaged in contracts

Hurt

Hurt or helped by inflation: people on fixed incomes

Hurt

Hurt or helped by inflation: savers

Hurt

"Your savings for you summer job are in a savings account paying a fixed rate if intrest" are you hurt or helped during inflation? And why?

Hurt; money loses purchasing power when prices go up

If GDP ________, we want to know if we have actually made more stuff this year or if prices have just increased which make it look like we've made more.

Increased

What causes purchasing power to decease?

Inflation

What does the "I" in "IT'S FUN" stand for?

Intermediate goods or capital goods

Because interest rates increased, business cut back on spending for new machinery decreases what GDP sector?

Investment sector

What makes up 15% of the United States GDP?

Investment sector/ business spending

Why is looking at the unemployment rate important?

It can let us know how our economy is doing

What is a trough?

Lowest point of a wave

What does the "N" in "IT'S FUN" stand for?

Non-market transactions (mowing a persons lawn)

What is technological unemployment?

Occurs when workers are replaced by machines

What are the two other types of unemployment under structural unemployment?

Seasonal and technological

Who is responsible for tracking The United State's unemployment?

The Bureau of the Census

What is the price level?

The average of the current prices for all goods and services in the economy

What is GDP?

The dollar amount of all final goods and services produced in a single year within the nation's borders

What does per capita income mean?

The income made per person in The United States (average income)

What is the inflation rate?

The percentage change in the Consumer Price Index (CPI)

What is macroeconomics?

The study of the economy as a whole

What does GDP per capita mean?

This is how much physical wealth is within each person in a year

What is the definition of unemployment?

Those who are actively seeking work ,but cannot find any

What are price indices designed for?

To help compare how prices differ between time periods

What does the "T" in "IT'S FUN" stand for?

Transfer payments or "free money"

What does the "U" in "IT'S FUN" stand for?

Underground economics (drugs and gambling)

What is cyclical unemployment?

Unemployment that is related to swings in the business cycle

Describe the "innovation and imitation" change:

When a company comes up with a new innovated idea, they will increase production to try to profit off the idea before their competitors can "copy" it

What is meant by net immigration?

Who moved to the United States (added) and who moved out (subtracted)

What is seasonal unemployment?

Workers who do not work year-round because of the nature of their jobs. (Lifeguard)

What is deflation?

a decrease in the general price level

What is stagflation?

a period of stagnant growth and inflation; it is characterized by DECLINING GDP ,but an INCREASING PRICE LEVEL.

What is depression?

a severe recession, "a prolonged and pronounced recession"

What is a recession?

a temporary economic slump, shorter and less extreme than a depression

GDP that has been adjusted for inflation is more ______ than GDP that has not been _______ for inflation.

adjusted

What is an expansion?

an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured by a rise in real GDP.

What is inflation?

an increase in the price level

What is the wrath effect?

as price goes up; you feel as if you're poor even though you have the same amount of money as you did before

Due to tax cut, consumers decide to buy more new cars will increase what GDP sector?

consumer or consumption sector

If there is an expansion and sales are high, cyclical unemployment goes ________.

down

What happens to the unemployment rate as the real GDP goes up and then goes down?

goes down

What is a market basket?

goods and services that are representative of the purchases that are made within a year (items bought by the average family)

What is the civilian labor force?

group of people who are non-military, non-institutionalized, and 16 years of age or older eligible to work

What is purchasing power?

how much a dollar will buy you

Are lenders hurt or helped during inflation?

hurt

Describe the "business expectations of the future" change:

if business expect the future to be good, they will purchase materials and make products now

Decrease in Intrest rates encourage businesses to take out loans to construct more buildings increases what GDP sector?

investment sector

What makes up -4% of the United States GDP?

net imports/foreign sector

Are imports counted towards the GDP?

no

Who is described as the "discourage worker" ?

people who got frustrated searching for work and eventually gave up looking

What is the business cycle?

recurring ups and downs in the GDP

What are idle resources?

resources are available ,but we're not making anything with them

What does the "S" in "IT'S FUN" stand for?

second hand sales or used goods

Describe the "external factors" change:

shocks, weather war or anything that can affect the business cycle.

What is the economic definition of Acute?

shortage of goods and services

Describe the "changes in saving and spending" change:

two options when it comes to money- you can save it or you can spend it

What happens to unemployment during an expanding period?

unemployment goes down

What happens to unemployment during a contraction period?

unemployment goes up

What is structural unemployment?

unemployment that occur when there is less demand for worker and his skills

If there is a recession and sales are low, cyclical unemployment goes __________.

up

What is frictional unemployment?

when a worker is between jobs or looking for his first job

What is the full employment rate?

who our unemployment rate is below 5%

Are exports counted as GDP?

yes

Is structural unemployment usually permanent? Give an example.

yes. There will never again be a need for someone to repair typewriters