Studied by 2 people
factors of production
land, labor, capital, entreprenuership
shifts in the ppc
quantity/quality, tech, trade
absolute advantage
most output
comparative advantage
lower opportunity cost
law of demand
inverse relationship between quantity demanded and price
demand shifters
preference, number of consumers, substitutes/complements, income, future expectation
substitutes
goods used in place of each other
complements
goods used together
law of supply
direct relationship between quantity supplied and price
supply shifters
resources, number of sellers, tech, government intervention, future expectations
shortage
Qd > Qs
surplus
Qd < Qs
double shift rule
if both supply and demand change, both price and quantity cannot be determined
factor payments
payments for factors of production
transfer payments
when the government redistributes income
gdp
dollar value of all goods and services produced in one year in the united states
change in gdp
(year 2 - year 1/year 1)(100)
gdp per capita
gdp/population
not included in gdp
intermediate goods + nonproduction transactions + nonmarket activities
intermediate goods
goods inside the final good
nonproduction transactions
financial transactions
nonmarket activities
goods made at home or illegally
income approach
labor income + rental income + interest income + profit
labor income
income earned from working
rental income
income earned from owned property
interest income
income earned from loaning money to businesses
profit
money that businesses make after paying their costs
expenditures approach
consumer spending + business investment + government spending + net exports
consumer spending
purchase of goods and services by individuals
business investment
business spending for tools and equipment
government spending
spending on public goods and services
net exports
exports - imports
value-added approach
adds up the dollar value at each stage of production
unemployment rate
unemployed/labor force
labor force
at least 16, looking for employment, not in jail/hospital, not retired/military/student
labor force participate rate
(employed + unemployed)/population
frictional unemployment
temporary unemployment
structural unemployment
unemployment caused by changes in the labor force
cyclical unemployment
unemployment caused by recession
natural rate of employment
frictional + structural
price indices
index numbers assigned to each year
consumer price index
(price of market basket/price of market basket in base year)(100)
gdp deflator
(nominal gdp/real gdp)(100)
hurt by inflation
lenders
helped by inflation
borrowers
