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30 Cards in this Set

  • Front
  • Back
-gross domestic product
-the market value of all final goods and services produced in the United States during a given period, usually a year
-primary rule: no double counting
-formula: C+I+G+(X-M)
GDP per Capita
-GDP divided population
-most important measure for comparing nations
5 things GDP misses
household activity, quality/variety, depreciation, underground economy, externalities
Consumer Price Index
lumps many goods together into one unit and then looks at how inflation affected that unit (unit is called a market basket)

-calculate: (newer year/base year)x 100
aggregate demand and aggregate supply
intersection shows price level(y-axis) and real GDP(x axis)
show an entire economy's demand for goods and services as well as an entire economy's supply of goods and services, for one year
Nominal GDP
GDP based on prices at the time of the transaction; current dollar GDP
Real GDP
the economy's aggregate output measured in dollars of constant purchasing power; GDP measured in terms of the goods and services produced
4 sources of economic growth
add resources, improve quality of existing resources, technology, better rules of game
PPF grows with more capital goods made over consumer goods
improves stock of resources
labor productivity
total output divided by hours of labor
capital deepening
improving both physical and human capital
3 economic sectors
agricultural, industry, service
why the third world exists
relative global inequality today
basic research
the search for knowledge without regard to how that knowledge will be used; a first step toward technological advancement; ie: universities
applied research
research that seeks answers to particular questions or applies scientific discoveries to develop specific products; ie: bionic arm
pros and cons of technological change
removes jobs, creates jobs
creates more jobs than it removes because it creates entire industries
industrial policy and political spectrum
communism, socialism, modern democracies, laissez faire capitalism, anarchy
4 kinds of unemployment
seasonal, frictional, structural, cyclical
full employment
occurs when there is no cyclical unemployment; relatively low unemployment

can be achieved through fiscal and monetary policy
workers are overqualified for their jobs or work fewer hours than they would prefer
unemployment rate
the number of people looking for work (unemployed) divided by the number in the labor force
labor force
those in the adult population who are either working or looking for work
labor force participation rate
number in labor force divided by adult population
unemployment benefits
money provided to people who lose their jobs from cyclical employment

cons- people want to stay on them
an increase in the economy's general price level
cost push inflation and demand pull inflation
cost push=worst (economic contraction)
demand pull=economic growth bc higher equilibrium
nominal interest rate
not adjusted interest rate, the interest rate the bank gives you
real interest rate
nominal minus inflation
4 schools of economic thought
classical, Keynesian, monetarist, supply side
the Laffer curve
to increase dollar amount of taxes, raise tax rates
backward bending->raise taxes too high and people will opt out of work force