AP Macro Econ Unit 3

GDP =

C+I+G+(X-I)

Real GDP per Capita=

GDP/Population

Nominal GDP=

(P1*Q1)+(P2*Q1)

Real GDP=

(Nominal GDP/GDP deflator)*100

Economic Growth Rate=

[(new GDP-old GDP)/old GDP]*100

Labor Force=

employed + unemployed

Unemployment Rate=

(# unemployed/# in labor force) * 100

Labor Force Participation Rate=

(Labor force/non institutionalized population over 16)*100

Target % of Economic Growth

2-5%

Target % of Inflation

2%

Target % of Unemployment rate

4-6%

expansion

GDP rises; positive economic growth rate

peak

GDP stops rising; was positive, then becomes negative or 0% growth rate

contraction

GDP falls; negative economic grwoth rate (6 moths of this = recession)

trough

GDP stops falling; growth rate was negative, then becomes positive or was 0%

GDP

the $ value of final goods and services produced within a country’s borders in a given time period

real GDP per capita

identifies the value of the products each person makes on average or an average income per person

Nominal GDP

GDP measured in current prices; does not account of inflation from year to year

Real GDP

GDP expressed in constant, or unchanging dollars

Frictional

individuals are qualified workers with transferable skills, but haven’t found a job yet

seasonal

frictional unemployment dye to the time or year and nature of the job

structural

the is a mismatch between the skills employers want and those that worker(s) have in common in the region or due to changes in technology

technological

structural unemployment cause by technological changes and advances

cyclical

results from economic downturns (recessions where workers are laid off)

discouraged workers

some people are no longer looking for a job because they have given up

part-time workers/underemployed persons

people who want more shifts or are working in a job below their qualifications

illegal labor

many people work “under the table” and it is not reported

racial/age inequalities

range of unemployment rates due to discrimination and/or prejudices