Macro Ex. 2 - final type through

Imports

Goods and services bought domestically but produced in other countries.

Exports

Goods and services produced domestically but sold in other countries.

Who benefits from international trade?

Consumers gain access to a wider range of products at potentially lower prices; producers can expand markets and increase sales; governments enhance economic growth through trade policies.

Who loses as a result of international trade?

Domestic industries may suffer due to increased competition, leading to job losses and reduced market share; workers in non-competitive sectors may face wage stagnation or unemployment.

Free trade

Trade between countries that is without government restrictions.

Tariffs

Taxes imposed by a government on imports.

Import quotas

Numerical limits imposed on the quantity of a good imported by one country from another.

How are import quotas and tariffs different?

Tariffs are applied as a percentage of the value of imported goods; import quotas restrict the actual volume of goods that can be imported.

How are import quotas and tariffs similar?

Both are trade barriers used to protect domestic industries from foreign competition and regulate the flow of goods.

GDP

The market value of all final goods and services produced in a country during a period, typically one year.

What does GDP measure?

GDP measures output produced within a country’s borders.

What are the shortcomings of GDP?

It doesn't account for household production, illegal goods and services, and unpaid work.

Household production

Goods and services people produce for themselves, which are not captured by GDP.

GNP

The value of final goods and services produced by a country’s residents, regardless of where the production occurs.

What is the difference between GDP and GNP?

GDP measures value produced within a country’s borders; GNP includes production by residents regardless of location.

Final good

A good or service purchased for final use by a consumer.

Intermediate goods

Inputs into the production of another good or service.

Government purchases

Spending by federal, state, and local government on goods and services; excludes transfer payments.

Net exports

Exports minus imports.

Labor force

The sum of employed and unemployed workers actively seeking employment.

Not in the labor force

Individuals who do not have a job and are not actively seeking employment.

Discouraged workers

Individuals available for work who have stopped seeking employment due to belief that no jobs are available.

Unemployment rate

The percentage of the labor force that is unemployed.

Labor force participation rate

The percentage of the working-age population in the labor force.

Working age population

The labor force plus the non-labor force.

Frictional unemployment

Short-term unemployment that arises from the process of matching workers with jobs.

Structural unemployment

Unemployment arising from a persistent mismatch between worker skills and job requirements.

Cyclical unemployment

Unemployment caused by a recession.

Full employment

When cyclical unemployment is zero.

Natural rate of unemployment

The normal rate of unemployment, consisting only of frictional and structural unemployment.

How is someone considered to be in the labor force?

They are employed or unemployed and actively seeking a job.

How is someone not in the labor force?

They are unemployed and not actively seeking a new job.