Unit 3 Macro
add up all the income that resulted from selling all final goods and services produced in a given year
income approach
factor payments
labor earns wages, land earns rent, capital earns interest, entrepreneurship earns profit
purchases of final goods by private individuals
consumer spending
Deflation decrease..(2)
consumer spending, GDP
temporary unemployment or being between jobs; graduates; seasonal unemployment
frictional unemployment
school, tanks, but not transfer payments
government spending
the % increase in purchasing power that a borrower pays (adjusted for inflation)
real interest rates
wage adjusted for inflation
real wage
6 month period of decline in real GDP
recession
someone who wants more hours but cant get them is still considered employed
underemployed
workers that are actively looking for a job but aren't working
unemployment
% of people in the labor force who want a job but are not working
unemployment rate
GDP measured in current prices; doesn't account for inflation
Nominal GDP
CPI is a acronym for
Consumer Price Index
measures prices of only the goods and services bought by consumers
Consumer Price Index
Which of the following groups would most likely gain from unanticipated inflation? a- landlords who own apts in cities w/ rent ctrls b- indv. who have fxed retirement incomes c-indv. who earn high incomes d-indv. who have borrowed $ @ fxed interest rates e-banks that have loaned all excess reserves at a fixed interest rate
D
measures the prices of all goods produced
GDP Deflator
GDP expressed in constant, unchanging, dollars
Real GDP
Which of the following best illustrates an improvement in a country's standard of living? a- an increase in real per capita gross domestic product b-a increase in nominal per capita gross domestic product c-price stability d- a balanced budget e- an increase in the consumer price indec
a
Hyperinflation is typically caused by a-high tax rates that discourage work effort b-continuous expansion of the $ supply to finance gov't budget deficits c-trade surpluses that are cause by strong protectionist policies d-bad harvest that lead to widespread shortages e-a large decline in corporate profits that leads to a decrease in production
b
Which of the following will be counted as unemployed by the U.S. Bureau of Labor Stats? a-persons who quit their previous jobs to stat @ home to care for sicks parents b-persons who were laid off from their previous jobs and have not applied for a job in two years c-persons who were fired from their previous jobs and are actively applying for work d- persons who have given up looking for jobs after long searches e- persons who quit their previous jobs to start their own business
c
higher production cost increases prices
cost-push inflation
unemployment caused from a recession; due to economy/ gov't
cyclical unemployment
When an economy is in equilibrium at potential gross domestic product, the actual unemployment rate is a- equal to the cyclical rate b- greater than the natural rate c-less than the natural rate d-equal to the natural rate e-equal to zero
d
decrease in general prices or a negative inflation rate
deflation
too many dollars chasing too few goods
demand-pull inflation
prices increasing at slower rates
disinflation
The consumer price index (CPI) is designed to measure changes in the a- spending patterns of urban consumers only b- spending patterns of all consumers c-wholesale price of manufactured goods d-prices of all goods and services produced in an economy e- cost of a select market basket of goods and services
e
Which of the following household purchases will be counted as part of gross private investment in a country's gross domestic product? a- gov't bonds b-shares of company stock c- corporate bonds d- a new car for personal use e- a newly constructed home
e
add up all the spending on final goods and services produced in a given year
expenditures approach
rising general level of prices and it reduces the "purchasing power" of money
inflation
the % change in prices from year to year
inflation rate
goods inside the final goods don't count
intermediate goods
business spending tools and equipment
investment
Inflation decreases..(2)
investment, GDP
frictional + structural unemployment
natural rate of unemployment
the % increase in $ that the borrower pays not adjusting for inflation
nominal interest rates
wage measured by dollars rather than purchasing power
nominal wage
things made at home-household production
non-market and illegal activites
financial transactions (nothing produced0
nonproduction transactions
index #'s assigned to each year that show how prices have changed relative to a specific base year
price indices
changes in the labor force make some skills obsolete; job never come back; workers must learn new skills to get a job; technological unemployment
structural unemployment