Econ Midterm pt. 2
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25 Terms
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Most Desired Outcome for Level of GDP
high level
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Most Desired Outcome for Rate of Growth for GDP
positive growth (upward trend)
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Most Desired Outcome for Price Levels
constant level (stable, no inflation- low rate of inflation acceptable)
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Most Desired Outcome for Employment
full employment
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Frictional employment
result of time involved in adjusting to changing labour force and employment opportunities \[in between jobs\]
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Three indicators of economic growth
1. rate of growth of real national income
2. rate of inflation
3. rate of employment
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Employment
number of adults (15 yrs or older) employed (working) full-time, part-time, or self-employed
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Unemployment
not working but available for and seeking work (economic, social, psychological problem)
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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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Actively looking for a Job
How long/ when was the last time you looked for a job?
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Rate of unemployment equation
unemployed/labor force
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Discouraged workers
Want to work but no longer look because they believe suitable work is not available
\[not considered unemployment because you are not actively looking for jobs\]
\[not considered unemployment because you are not actively looking for jobs\]
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Demand/Supply Equations
Demand: P = 10-q
Supply: P = 1 + (1/2)q
Supply: P = 1 + (1/2)q
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Cyclical Unemployment
Observing GDP as it goes through cycles; captures cyclical nature of GDP expansion
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Structural Unemployment
Caused by changes in economic structure relative to labor force characteristics
\[mismatch of demand and supply labor pertaining to skills\]
\[mismatch of demand and supply labor pertaining to skills\]
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Expenditure Based GDP
Consumption + Investment expenditures + Government expenditures + (Exports - Imports)
\
\[C + I + G (X - IM)\]
\
\[C + I + G (X - IM)\]
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GDP per Capita
Real GDP/ Pop.
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GDP deflator \[equation\]
index of current final output prices relative to base year prices
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GDP deflator = (Nominal GDP/Real GDP) x 100
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GDP deflator = (Nominal GDP/Real GDP) x 100
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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
\
\[GDP (year)/ GDP deflator\] x 100
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Rate of growth of real GDP
Rate of growth of real GDP = \[Real GDPyear 2 − Real GDPyear 1\]× 100
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Nominal GDP
the market value at current prices of all final goods and services
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Price Index
a measure of the price level in one year compared with prices in a base year
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Employment Rate
(employment/ population 15+ years) x 100
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Unemployment rate
(labor force- employment/labor force) x 100
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Calculating Real GDP
(nominal GDP/GDP deflator) x 100
Note 
Flashcards (103)