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MacroEconomics MCconell Test 1
Test one chapt 1&2
46
Economics
Undergraduate 1
02/10/2009

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Term
What is the Difference between Rational self interest and Selfishness
Definition
Rational self Interest is increasing ones own rents interest or profit this also satisfys sombody else's wants, people make personal sacrifices to others
Term
what are the four Phases of generalized business
Definition
Peak, Recession, trough, expansion
Term
what is a capital resource
Definition
a Manufactured resource
Term
what are durables
Definition
Durables products such as refrigerator, computers, automobiles.
Term
what are non-durables
Definition
services such as health, and legal services
Term
what are the four types of unemployment
Definition
frictional, structural, cyclical,
Part time unemployment or seasonal unemployment
Term
cyclical Unemployment
Definition
the Skills are good but the economy is Bad, down turn in business cycle
Term
Frictional unemployment
Definition
any given time some workers are "between jobs" either voluntarily quit or fired
Term
Structural unemployment
Definition
change in consumer demand (such as records, to cd, to mp3s,) and in technology alter the structure of the total demand for labor
Term
GDP gross domestic product
Definition
monetary measure of the total market value of all final goods and services produced with in a country in one year
Term
what is Total market value
Definition
what product could be sold for or is sold for
Term
Economic Growth
Definition
an increase in real GDP occurring over some time period
OR and increase in real GDP per capita occurring over some time period
a percentage of rate growth per quarter
Term
What are the main sources of Growth
Definition
Increasing its inputs of resources
and by increasing the productivity of those inputs
Term
increases in Land labor capital and entrepreneurial resources yield what
Definition
additional Output
Term
growth also occurs in the increase of
Definition
Productivity
Term
Final goods and serviced
Definition
all goods and services counted once the value of total produce over a year. Yearly rate calculations. Not looking at what was sold but what was produced
Term
what is not counted in GDP
Definition
Transfers,second hand sales, labor not paid for such as parenting,or barter system,
Term
What we are trying to get close with GDP
Definition
how wealthy we are as a nation.
Term
Income generates
expenditure generates
Definition
expenditure
Income
Term
GDP =
Definition
consumption + Investment + Government Purchases of Goods + (x-m) the net exports, exports minus imports (GDP= C+I+G+(x-m)
Term
Durable Goods
Definition
goods that Last 3 years or longer,
Term
Non- durable goods
Definition
such as food, and services
Term
what is investment
Definition
the creation of capital goods
Term
Government purchases of goods includes
Definition
Fed State, and Local
Term
exports create income where
Definition
in the US
Term
Consumption is 70% of
Definition
GDP
Term
Nominal GDP
Definition
GDP that has been inflated or deflated to reflect changes, market value current prices
Term
Real GDP
Definition
corrected for price changes
Term
The current market basket base year is
Definition
2000
Term
PEak
Definition
business activity has reached a temporary maximum
Term
Recession
Definition
a period in decline in total output. downturn in 6 months (two quarters)
Term
trough
Definition
output of employment "bottom out"
Term
expansion
Definition
a period in which real GDP, income, and employment rise
Term
effects of durables on the business cycle
Definition
During a recssion business will decrease the amount of durables they purchase. Often they will fix their old equipment and hope it holds together
Term
Non-durables effect on the business cycle
Definition
non-durables are somewhat unaffected by recession due to the necessity, such as health care, and legal service
Term
what are the four layers of the Labor force
Definition
Under 16 or institutionalized, not in labor force, Employed, and unemployed,
Term
formula for measuring unemployment
Definition
unemployed divided by labor force (employed) multiplied by 100
Term
GDP does not measure
Definition
unpaid labor,how happy someone is, volunteer work, home improvements, more leisure, does not make allowances in product quality, Illegal activities, underground Economy
Term
what is the GDP Gap
Definition
The difference between actual and potential GDP.
actual GDP - Potential GDP
Term
what is the economic cost of unemployment
Definition
lost output in economy, potential production of goods and services are irretrievably lost
Term
what is Okun's Law
Definition
every 1 percentage point by which actual unemployment rate exceeds the natural rate, a negetive GDP gap of about 2% occurs
Term
Okun's Formula
Definition
multiply exceeding natural rate of unemployment by 2
Term
natural rate of unemployment
Definition
unemployment is only structural, and frictional (no cyclical)
Term
problems that arise from Business cycle
Definition
INFLATION,unemployment
Term
what are some problems with how we measure unemployment
Definition
The number of discouraged workers or those who dont believe that they are able to get a job
Term
why did the NRU decline since the 1980s
Definition
growing proportion of younger workers
growth of temp help agency
work requirements under welfare laws
the doubling of US prison population
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