Macro Units 1 + 2

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