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