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AP Macro
Unit 2: Measurements of Eco. Performance
| Term | Definition |
|---|---|
| Gross Domestic Product (or GDP) | The total value of all final goods and services produced in the economy during a given year |
| final goods and services | Goods and services sold to the final, or end, user. |
| Intermediate Good | Goods and services bought from one firm by another firm to be used as inputs into production of final goods and services |
| Real GDP | The total value of all final goods and services produced in the eco. during a given year, calculated using the prices of a selected base year. |
| Nominal GDP | The total value of all final goods and services produced in the eco. during a given year, calculated with the prices current in the year in which the output is produced |
| GDP Per Capital | Is GDP divided by the size of the population; it is equivalent to the average GDP per person |
| Labor Force | is equal to the sum of the employed and unemployed |
| Unemployment Rate | Is the percentage of the total # of people in the labor force who are unemployed. Only indicates those that are actively looking for work but can't find a job. |
| Frictional Unemployment | Unemployment due to the time workers spend in job search. (searching or waiting for jobs...recent college grads) |
| Structural Unemployment | Type of Frictional unemploy. that results when there are more people seeking jobs in a labor market than there are jobs available at the current wage rate. (often due to creative destruction...new skills have made old skills outmoded) |
| Natural Rate of Employment | The unemployment rate that rises from the effects of frictional + structural unemployment |
| Cyclical Unemployment | Is the deviation of the actual rate of unemployment from the natural rate. (cause of recession) |
| Inflation Rate | Is the percent change per year in a price index-typically the consumer price index |
| Unit of account costs | Arise from the way inflation makes money a less reliable unit of measurement |
| Nominal interest rate | Is the interest rate actually paid for a loan |
| Real interest rate | Is the nominal interest rate minus the rate of inflation |
| market basket | A hypothetical set of consumer purchases of goods and sevices. |
| price index | Measures the cost of purchasing a given market in a given year, The index value is normalized so its = to 100 in the selected base year. |
| Consumer Price Index (CPI) | Measures the cost of the market basket of a typical urban American family |
| GDP deflator | For a given year is 100xs the ratio of nominal GDP to real GDP in that year |
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aly01
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