Econ U2

GDP expidentures formula

C+I+G+(X-M)

GDP incomes formula

rent+wages+income+profit

Labor Force

emploment+unemployment

Labor Force Participation Rate

(labor force/working age population)x100

Unemployment Rate

(# of unemployed workers/labor force)x100

Frictional Unemployment

unemployment due to the time workers spend job searching

Structural Unemployment

workers lose jobs because their skills are no longer in demand, such as being replaced by machines

Cyclical Unemployment

total unemployment caused by the ups and downs of the business cycle, rising during recessions and falling during expansions

Nominal

value or price measured in current prices, not adjusted for inflation

Consumer Price Index

(nominal/real)x100

Market Basket

good A good B good C

(# x price)+(# x price)+(# x price)

Disinflation

(new market basket-old M.B./old M.B.)x100

Inflation Rate

(new PI-old PI/old PI)x100

Nominal Value

real value x (price index/100)

Real Value

(nominal/PI)x100

Nominal Interest Rate

real interest rate+inflation rate

Real Interest Rate

nominal interest rate-inflation rate

Nominal GDP

real GDP X (GDP deflator/100)

Real GDP

(nominal GDP that year/ GDP deflator)x100

GDP Deflator

(nominal GDP/real GDP)x100

Expansion

GDP increases

Contraction

GDP decreases