gdp, inflation, unemployment

what does GDP NOT account for?

used/second hand products, purely financed transactions (grants/transfer payments), services provided for no money, foreign produced goods and services

what does GDP account for?

Personal consumption expenditures (C), Gross Private Domestic Investment in Business (I), Government Purchases (G), Net Exports (Xn)

frictional unemployment

due to time workers spend in job search

structural unemployment

results when there are more people seeking jobs in a labor market than there are jobs available; no desirable skills.

cyclical unemployment

follows the business cycle, happens during recessions

seasonal unemployment

occurs by season, is temporary

nominal gdp

current year price x current year quantity

real gdp

base year price x current year quantity

economic growth

(new real gdp - old real gdp / old real gdp) x 100

rate of inflation

(new - old / old) x 100

gdp deflator

(nominal gdp / real gdp) x 100

natural rate of unemployment

frictional + structural

actual rate of unemployment

natural + cyclical

real wages/income/interest rate

nominal - inflation

who is helped by inflation?

borrowers

price index

(Basket of Given Year/ Basket of Base Year) x 100

Xn

exp - imp

real gdp

(nominal gdp / aggregate PI) x 100

nominal gdp

real gdp x (aggregate PI/100)