Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
ECON 220
Exam 2
| Question | Answer |
|---|---|
| GDP | the value of all final goods and services produced within a country inside of a year |
| final goods | purchased by the final user (prevents double counting) |
| business cycle | how GDP moves - an upward trend over time in the long run, but short term fluctuations |
| expansionary - business cycle | short upward run |
| peak - business cycle | top of expansion |
| recession - business cycle | short downward run |
| trough - business cycle | bottom of recession |
| circular flow model | households, product market, firms, and labor market (add government, banks, int. market trade) |
| components of GDP | consumption (C), investment spending (I), government spending (G), import/export spending (NX) |
| consumption makes up what percent of GDP | 80% |
| investment spending | new construction, capital and inventories |
| net exports/imports | export spending - import spending |
| nominal values | normal, unchanged |
| real values | adjusting for inflation |
| GDP deflator | Price index that measures the average prices of all final goods relative to some base year - nominal/real x100 |
| exchange rate | value of one currency in terms of another currency |
| GDP per capita | GDP/population |
| Gross national Product | value of all final goods and services produced by a countries citizens |
| Net National Product | GNP - depreciation |
| Gross National Income | total income earned by a country regardless of where it is earned |
| GDP pros | common/well known, "umbrella" measure |
| GDP cons | measurement error, uncounted economic activity, standard of living, happiness |
| 4 categories of unemployment | employed, unemployed, out of labor force, labor force |
| employed | working for pay |
| unemployed | out of work, actively looking for a job |
| out of labor force | out of work, not actively looking for job |
| labor force | unemployed + employed |
| unemployment rate | unemployed/labor force x100 |
| labor force participation | labor force/working age pop. x100 |
| current population survey | US Bureau of Labor and Statistics – survey about 60,000 households, uses survey responses to calculate monthly unemployment rate |
| current employment statistics survey | survey of 147,000 businesses and government agencies across US – employee counts, average weekly hours, average weekly, hourly and overtime wages - Does not count self-employment, no distinction between job types |
| unemployment rate does not count | kids under age of 16, retired individuals, prisoners, disabled individuals, people who don’t participate in survey, those who don’t have to work, |
| discouraged workers | person who could work, able to work and chose to stop looking for a job |
| underemployed | working for a lower paying job or job that doesn’t utilize skills/education – “mismatch” literature |
| U6 unemployment | : (total employed + marginally attached workers + total employed part time for economic reasons)/ (civilian labor force + marginally attached workers) |
| marginally attached workers | discouraged worker who hasn’t looked for job in past year |
| employment population ratio | employed/working age pop. x 100 |
| patterns of unemployment | Generally moves w/ business cycle, no upward or downward trajectory, race and gender |
| short-run unemployment | cyclical unemployment: employment moves with short run changes in the business cycle – demand for labor is determined by state of economy |
| sticky wages | if its hard for wages to adjust in the short tun, firms can only respond by firing workers |
| implicit contract | employers try to keep wages from falling when economy is bad |
| efficiency wage theory | workers productivity depends on their wage |
| adverse selection on wages | want to keep productive workers, so they keep “high paid” productive people and fire others |
| insider-outsider model | tenured workers= insiders, newer workers= outsiders |
| relative wage coordination | even if workers are willing to take a wage cut, its hard to distribute in aggregate because of decentralized structure of labor markets |
| long-run unemployment | natural rate or unemployment - tends to be 4-6% |
| frictional unemployment | workers moving between jobs, getting first job |
| structural unemployment | when skills of workers don’t match needs of employers |
| seasonal unemployment | temporary unemployment by season |
| inflation | general increases in prices in an economy (CPI2 - CPI1)/CPI1 x 100 |
| contracts | problem with inflation; wages have to catch up, wages stays the same as prices increase and cause affordability issues |
| menu costs | problem with inflation; cost incurred when prices changes, burden when there are volatile price changes |
| demand-pull inflation | too much money chasing too few goods |
| wage-price spiral | as people get paid more, demand increases, leading prices to increase, and so on |
| cost-push inflation | an increase in the cost of production leads to passing costs to consumers in form of higher prices |
| profit-price spiral | firms increase their markups in anticipation of higher costs |
| price-price spiral | firms raise prices which leads to other firms raising prices as well |
| consumer price index | used to calculate inflation, market basket of goods the average family of 4 would purchase |
| problems with CPI | new product bias, quality bias, substitution bias, outlet bias |
| producer price index | prices firms pay for supplies and inputs |
| employment cost index | measures wage inflation/changes in labor market |
| international price index | price changes of good that are imported and exported |
| hyperinflation | rapid increase in prices, usually defined by monthly inflation rate of 50% or more - russia 1990's, US civil war |
| stagflation | economy experience high inflation and high unemployment simultaneously - 1970s oil crisis |
| deflation | negative inflation - great depression |
| COLA | cost of living adjustment; adjustment of wages in response to inflation (6% inflation, 6% increase in wage), |
| adjustable rate mortgage | Loan w/ interest rate changing over time based on economic conditions |
| drivers of economic growth | technology, human capital, physical capital |
| aggregate production function | defines or explains some process where an economy turns economic inputs into outputs |
| sustained economic growth | consistent economic growth over time, compounds on itself |
| labor productivity | value of output per worker or hour worked |
| capital deepening | society increases level of capital per person leading to increase in labor productivity by giving workers more tools |
| aggregate production function GDP | workforce, human capital, capital, technology |
| economic convergence | economies with lower per capita income grow faster than economies with higher per capita income; more opportunity/room to grow - takes a long time |
| approaches to economic growth | improve/adopt technology implemented in other countries, learn from other countries that have grown |
| philips curve 1958 | unemployment and inflation inverse relationship |
| government program indexing | Automatically adjust for inflation, SNAPS, social security, etc |
| power of sustained growth | stability, allows for institutional and human adaptation, allows for adjustments to wages, its a balancing game |
Created by:
kayleejh0829