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Gross Domestic Product(GDP) Value of final goods&services produced and sold within a given territory during a given year.
Nominal Measured in current prices
Real Adjusted to show value measured in the prices of some base year
Economic Growth Rate Rate of increase/decrease in a measure of economic activity
Nominal GDP Current year
Real GDP Some other year than "base year"
National Income Identity where Income(Y) equals Consumption(C)+ Gross Investments(Ig)+ Gov't Spending(G)+ Net Exports(X)
Growth Rates Difference/Base(earlier year)
Depression Gross loss of over 10%
Characteristics of Civilian Labor Force 1. At least 16 years of age. 2. Not a person of military 3. Either full/part time empoyee 4. If one is not employed, they are seeking work.
Price Indicies Allow us to separate the increase in prices from the increase in goods and sevices.
GDP Deflator Price index created from measures of the nominal cost of all goods produced
Real GDP Nominal GDP/ Deflator
Inflation Rate [Index(Base year T) / Index(T+N)]- 1
upturn output, employment, investment and borrowing, and prices in the product market and factor market are all rising
peak all of the above have reached their maximum; the upper boundary is determined by the population size & its corresponding civilian labor force, the loanable funds that banks are able to offer, & the amount of physical capital available to the economy.
downturn output, employment, investment and borrowing, and prices in the product market and factor market are all falling, accelerated downward by the unemployment in the market for physical capital
trough the cycle bottoms out, with all of the above at their lowest level. The economy pulls out of the trough when a demand for replacement capital creates re-employment in the capital goods sector. That accelerates the economy into another upturn.
The National Income Identity Income equals Consumption+Investment+Government Spending+(Exports-Imports)
Incomes Expenditures
Recession defined the news industry as two successive quarters of negative economic growth. A recession might be determined to have begun before there are actually two quarters of negative growth.
Professional Economist's definition of Recession Defined more vaguely by professional economists, taking into account consumer confidence, business confidence, sales/inventory ratios, new housing starts, and other measures of change in economic activity.
Inflation an increase in the general price level. (Contrasted to an increase in the price of individual products or factors that we study in microeconomics)
Unemployment Rate calculated as the number of unemployed divided by the Civilian Labor Force.
To be in the Civilian Labor Force 1.aged 16 or over 2.employed either full time or part time or actively seeking work (reporting to the state unemployment office and/or drawing unemployment insurance) 3.not retired and receiving social security 4.not a member of the armed forces
To be counted as Unemployed you must be 1.without a full or part time job, and 2.actively seeking work (reporting to the state unemployment office and/or drawing unemployment insurance)
cyclical unemployment that increases and decreases in different sectors over the course of the business cycle.
Seasonal unemployment a kind of cyclical unemployment. Although not significant in the US economy, in economies that remain dominated by agriculture, seasonality is the cycle that affects employment the most.
structural unemployment that results from changes in technology or broad changes in demand, such that the demand for a particular work force with particular skills comes into existence or goes out of existence.
frictional unemployment that results while people are in the midst of job changes. This kind of unemployment is not necessarily undesirable because it also represents upward mobility.
Deflation a negative change in the general price level, such that the rate of inflation as measured would be negative
Disinflation a decrease in the rate of inflation, that is, the rate of inflation is positive but lower than before
Stagflation high inflation rates coupled with high unemployment rates, a phenomenon that began appearing in the 1970s
Expenditures Method starts with the value of final goods and services in the Product Market (Aggregate Demand): Consumption + Gross Investment + Government Spending + (Exports – Imports)
Incomes Method starts by summing incomes paid to factors of production in the Factor Market. This sum yields the national income account known as National Income (incomes earned). To get from National Income to Gross Domestic Product, depreciation and indirect business
Created by: bja34



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