Term
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Definition
| A decline in the country's GDP for 2 consecutive quarters (one quarter=3 months) |
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Term
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Definition
| Total monetary value of all final goods & services produced domestically over a specified period of time. |
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Term
| 3 Types of GDP comparisons |
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Definition
| (1) International (2) Intertemporal (between times) (3) Potential GDP (benchmark-allows normal level of structural and frictional unemployment but zero cyclical. |
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Term
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Definition
| Unemployed / unemployed + employed (aka labor force) |
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Term
| Why does the UR understate the true problem? |
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Definition
underemployed- people working part-time but would like to be FT. Counts as employed.
Discouraged workers- not working and have given up looking for a job. Not counted as unemployed |
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Term
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Definition
| Structural, Frictional and Cyclical |
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Term
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Definition
| caused by changes in the economy (changes in consumer demand or Technology) usually require RETRAINING! |
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Term
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Definition
| "Search and Wait" unemployment. (relocation or moving to higher-paying jobs. |
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Term
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Definition
| Due to a general downturn of the economy. Like now, in a recession. |
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Term
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Definition
| Real wages are adjusted for inflation. Always deal with real. |
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Term
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Definition
| % change in Real __ = % change in nominal __ - % change in the price level |
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Term
| % change in price level = |
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Definition
| % change in price level = Inflation Rate = % change in CPI's |
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Term
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Definition
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Term
| Expenditure Method = Income Method |
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Definition
| they're the same. dont forget. |
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Term
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Definition
| GDP=AE=C+I+G+NX=C+I+G+X-Imp |
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Term
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Definition
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Term
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Definition
| C=MPCxDI+AC(aka Autonomous Consumption) |
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Term
| MPC (Marginal Propensity to Consume) |
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Definition
| Change in Real Consumption/Change in Disposable Income |
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Term
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Definition
| Multiplier= 1/1-MPC=change in Y*/change AEcomp |
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Term
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Definition
| Change in C= MPC x Change in DI |
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Term
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Definition
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Term
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Definition
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Term
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Definition
1. Happiness/Quality of Life
2. Black Markets (underground economies)
3. Depletion of Natural Resources
4. Technological Innovations
5. Do It Yourself Services |
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Term
| Factors Affecting Consumer Spending |
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Definition
| Real Wealth (all the assets you own) increase, Price Level, Expectations of Future Income |
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Term
| Factors affecting Investment |
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Definition
| Interest Rates (if increase, I decrease), Expectations of Future Profits (high expectations imply higher I) |
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Term
| Factors Affecting Net Exports |
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Definition
Domestic GDP (GDP increases, C increases, Imp increase, therefore NX decreases)
Foreign GDP (if Increase, foreign consumers are buying more of our goods, therefore NX increases)
Relative Price Levels ( price of foreign goods increases, so our exports increases therefore NX increases) |
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Term
| Marginal Propensity to Import (MPI) |
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Definition
| % of extra $1 in disposable income that is spent to purchase imports. |
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