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Econ 381 Ch1&2

Macroeconomics

QuestionAnswer
Another word for elegant Juli Jackson
Macroeconomics The study of the economy as a whole
GDP The market value of all final goods and services produced within an economy in a given period of time.
Models Economic models illustrate, often in mathematical terms, the relationships among variables
Endogenous Variables Endogenous variables are those variables that a model tries to explain. Ex. Quantity of pizza exchanged.
Exogenous Variables Exogenous variables are those variables that a model takes as a given. Ex. Aggregate income & Price of materials.
Market Clearing The price of a good or service moves quickly to bring quantity supplied and quantity demanded into balance.
Flexible Prices Prices of G&S adjust instantly to changes in S&D.
Sticky Prices Prices of G&S adjust slowly to changes in S&D.
Microeconomics The study of how households and firms make decisions and how these decision makers interact i the market place.
Stock A quantity of measure at a given point in time. (ex. A persons wealth, the number of people unemployed people in the economy, the amount of capital in the economy, and the government debt are examples of stock).
Flow A quantity measured per unit of time. (ex. Income and expenditure, the number of people losing their jobs, the amount of investment, and the government budget deficit are flows).
Imputed Value An estimate value where an actual value is not available - Such as the price that one rents their own home from themselves
What is included as an imputed value to GDP? The price of wages for police, fire fighters,senators, the price we rent our own home from ourselves.
What is NOT included as an imputed value to GDP? Lawn mower, car, jewelry, cooked meals in home
Nominal GDP The value of goods and services measured at current prices
Real GDP The value of goods and services measured using a constant set of prices (base year prices)
GDP Deflator Reflects what is happening to the overall level of prices in the economy
GDP Deflator = ? GDP Deflator = (Nominal GDP / Real GDP)
Nominal GDP = ? Nominal GDP = Real GDP x GDP Deflator
Real GDP = ? Real GDP = (Nominal GDP / GDP Deflator)
Y = ? Y = C+I+G+NX Y = GDP C = Consumption I = Investment G = Government Purchases NX = Net Export (export - imports)
National Income Accounts Identity Y = C+I+G+NX
Consumption Goods and services bought by households * Nondurable goods (food and clothing) * Durable goods (cars and TVs) * Services (haircuts doctor visits)
Investment Goods bought for future use * Business fixed investment (PPE) * Residential investment (New housing) * Inventory Investment (increase in firms' inventories of goods (if inventories are falling, inventory investment is negative)
Government Purchases Goods and services bought by federal, state, and local governments. Includes Military equipment, highways, services provided by gov workers. DOES NOT include transfer payments to individuals such as S.S. & welfare.
Net Exports Accounts for trade with other countries
GNP Gross National Product - Where as GDP measures the total income produced domestically, GNP measures the total income earned by residents of a nation.
GNP = ? GNP = GDP+Factor Payments from Abroad - Factor Payments to Abroad
CPI Consumer Price Index
What is CPI? The CPI is the price of a basket of goods and services relative to the price of the same basket in some base year.
Laspeyres Index A price index with a fixed basket of goods. (CPI)
Paasche Index A price index with a changing basket of goods. (GDP Deflator)
Employed Includes paid employees, those who work in their own business, or unpaid workers in a family member's business.
Unemployed Includes those who were not employed, were available for work, and had tried to find employment during the previous four weeks. Includes those waiting to return from a lay-off.
Labor Force = Employed + Unemployed
Unemployment Rate = (Number of Unemployed / Labor Force) x 100
Labor-force participation rate The percentage of adult population that is in the labor force.
Labor-force participation rate = (Labor Force / Adult Population) x 100
Created by: justintucker
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