Term
| Gross Domestic Product (GDP) |
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Definition
| The total dollar value of all final goods/services produced inn a country in a given time period |
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Term
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Definition
-household production (do it yourself:lawn, painting, etc)
-financial assets: the sale of stocks or bonds & firms purchasing other firms (broker fees are included)
-the sale of used goods
-the sale of intermediate goods: goods sold to anyone that is not the final owner do now count |
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Term
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Definition
| Current Year Prices x Current Year Quantities (prices and quantities are valued in the same fiscal year) |
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Term
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Definition
Base Year Prices x Current Year Quantities
-allows you to accurately measure how the economy is doing over time as only quantity changes |
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Term
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Definition
The accumulated loss of output that results from RGDP falling below the projected potential GDP of a selected year (pp. 95)
*a measure of the dollar value of lost real GDP if the growth rate slows |
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Term
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Definition
| Real GDP- potential GDP is knowns as the output gap, if the gap is negative it is called the Okun gap |
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Term
| The Significant of The Lucas Wedge & Okun Gap |
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Definition
The Lucas wedge is much larger than the Okun gap.
Smoothing the business cycle (Okun Gap) saves spells of high unemployment and lost output. But maintaining a high rate of productivity growth (Lucas Wedge) makes a dramatic difference to the standard of living over a number of years. |
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Term
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Definition
# of unemployed people expressed as a percentage of all the people who have jobs or are looking for one
-excludes discouraged workers
-fails to tell about the number of part time workers who desire full time jobs |
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Term
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Definition
| A sustained increase in the price level of goods and services over time |
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