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1

Most Desired Outcome for Level of GDP

high level

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2

Most Desired Outcome for Rate of Growth for GDP

positive growth (upward trend)

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3

Most Desired Outcome for Price Levels

constant level (stable, no inflation- low rate of inflation acceptable)

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4

Most Desired Outcome for Employment

full employment

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5

Frictional employment

result of time involved in adjusting to changing labour force and employment opportunities [in between jobs]

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6

Three indicators of economic growth

rate of growth of real national income

rate of inflation

rate of employment

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7

Employment

number of adults (15 yrs or older) employed (working) full-time, part-time, or self-employed

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8

Unemployment

not working but available for and seeking work (economic, social, psychological problem)

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9

Labor Force

[Sub. set of Pop.] those who are employed and those who are not employed but *actively* looking for jobs

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10

Actively looking for a Job

How long/ when was the last time you looked for a job?

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11

Rate of unemployment equation

unemployed/labor force

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12

Discouraged workers

Want to work but no longer look because they believe suitable work is not available

[not considered unemployment because you are not actively looking for jobs]

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13

Demand/Supply Equations

Demand: P = 10-q

Supply: P = 1 + (1/2)q

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14

Cyclical Unemployment

Observing GDP as it goes through cycles; captures cyclical nature of GDP expansion

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15

Structural Unemployment

Caused by changes in economic structure relative to labor force characteristics

[mismatch of demand and supply labor pertaining to skills]

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16

Expenditure Based GDP

Consumption + Investment expenditures + Government expenditures + (Exports - Imports)

[C + I + G (X - IM)]

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17

GDP per Capita

Real GDP/ Pop.

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18

GDP deflator [equation]

index of current final output prices relative to base year prices

GDP deflator = (Nominal GDP/Real GDP) x 100

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19

Real GDP [equation]

The quantity of final goods and services produced by the economy in a specified period of time

[GDP (year)/ GDP deflator] x 100

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20

Rate of growth of real GDP

Rate of growth of real GDP = [Real GDPyear 2 − Real GDPyear 1]× 100

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21

Nominal GDP

the market value at current prices of all final goods and services

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22

Price Index

a measure of the price level in one year compared with prices in a base year

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23

Employment Rate

(employment/ population 15+ years) x 100

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24

Unemployment rate

(labor force- employment/labor force) x 100

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25

Calculating Real GDP

(nominal GDP/GDP deflator) x 100

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