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Final
AP Microeconomics: Units 1-6
| Question | Answer |
|---|---|
| gross domestic product (GDP) equation | C + I + G + (X-M) C: consumer spending I: investment spending G: government spending X: exports M: imports |
| national income (GDP) equation | wages + rent + interest + profit |
| calculating economic growth equation | %∆GDP = (Year 2 - Year 1/Year 1) x 100 |
| GDP per capita equation | GDP/population |
| unemployment rate equation | (# unemployed/# in labor force) x 100 |
| frictional unemployment | temporary unemployment (being between jobs) - qualified workers with TRANSFERABLE SKILLS - seasonal unemployment |
| structural unemployment | changes in labor market make skills obsolete - creative destruction - technological unemployment |
| creative destruction | the permanent loss of a certain job (can sometimes create new jobs) |
| cyclical unemployment | caused by a recession |
| natural rate of unemployment (NRU) equation | frictional + structural unemployment |
| labor force participation rate (LFPR) equation | (labor force/working-age population) x 100 |
| disinflation | prices increase at slower rates |
| consumer price index (CPI) equation | (price of market basket/price of market basket in base year) x 100 |
| inflation rate (IR) equation | (new# - old#/old#) x 100 |
| GDP deflator equation | (nominal GDP/real GDP) x 100 |
| nominal GDP equation | (deflator x real GDP)/100 |
| shifters of aggregate demand | - consumer spending, income, taxes - investment spending, interest rates - government spending - net exports, exchange rates |
| shifters of aggregate supply | - resource prices, supply shocks, inflation expectations - government actions, taxes on producers - productivity/technology |
| total ∆ in GDP equation | spending multiplier x initial ∆ in spending |
| M1 money | - currency in circulation - checkable bank deposits/checking account - traveler's checks |
| M2 money | M1 plus: - money market accounts and funds/saving deposits - certificates of deposits/time deposits |
| money multiplier equation | 1/reserve requirement |
| what does an INCREASE in the MONEY SUPPLY lead to? | decreases interest rates -> increases investment -> increases AD |
| when should you decrease the reserve ratio | during a recession (expansionary) |
| when should you increase the reserve ratio | during inflation (contractionary) |
Created by:
maraschrantz
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