JEAN PAUL MACRO FINAL 2024

Gross Domestic Product

-Measures total income of everyone in the economy.

- Also measures total expenditure on the economy's output of goods and services

-Currently produced goods not past

Nominal GDP

- Values output measured using current prices

- Not corrected for inflation

Final Goods

Goods produced for the intention of the end user

Inflation

Increase in overall price level

Nominal GDP/Real GDP x 100

GDP deflator

GDP computation

Y = C + I + G + NX

Real GDP

- Values output using the prices of a base year

- Is corrected for inflation

Intermediate Goods

used as components or ingredients in the production of other goods

Net Export

NX= Exports-Imports

Unemployed

A person 16 years old or older who is not working, is available for work, and has made specific efforts to find work during the previous 4weeks.

Employed

Any person 16 years old or older (1)who works for pay, either for someone else or in his or her own business for 1 or more hours per week, (2) who works without pay for 15 or more hours per week in a family enterprise, or (3) who has a job but has been temporarily absent with or without pay

Labor Force

The number of people employed plus the number of unemployed. Employed+unemployed

Structual Unemployment

The portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries.

cyclical uneployment

The increase in unemployment that occurs during recessions and depressions.

Real Interest Rate

The difference between the interest rate on a loan and the inflation rate

Productivity growth

The growth rate of output per worker.

Unemployment rate

unemployed / employed + unemployed

Frictional Unemployment

The portion of unemployment that is due to the normal working of the labor market; used to denote short-run job/skill matching problems.

Output growth

The growth rate of the output of the entire economy.

Not in Labor Force

A person who is not looking for work because he or she does not want a job or has given up looking

Labor force participation rate

The ratio of the labor force to the total population 16 years old or older.

labor force participation rate = labor force/population

Consumer price index

A price index computed each month by the Bureau of Labor Statistics using a bundle that is meant to represent the "market basket" purchased monthly by the typical urban consumer.

Aggregate Income

The total income received by all factors of production in a given period

Actual Investment

The actual amount of investment that takes place; it includes items such as unplanned changes in inventories.

Planned aggregate expenditure

The total amount the economy plans to spend in a given period. Equal to consumption plus planned investment

AE ≡ C + I

Equilibrium

Occurs when there is no tendency for change. In the macroeconomic goods market, equilibrium occurs when planned aggregate expenditure is equal to aggregate output

Marginal Propensity to save

That fraction of a change in income that is saved

MPC (marginal propensity to consume) slope of consumption

C/Y(Change in consumption divided my change in income)

Aggregate output

The total quantity of goods and services produced (or supplied) in an economy in a given period

Planned investment

Those additions to capital stock and inventory that are planned by firms

Aggregate Saving

The part of aggregate income that is not consumed

Consumption Function

The relationship between consumption and income.

Consumption

The using up of a resource

Frictional Unemployment

The portion of unemployment that is due to the normal working of the labor market; used to denote short-run job/skill matching problems.

Cyclical Unemployment

The increase in unemployment that occurs during recessions and depressions.

Cost of living Adjustments

Contract provisions that tie wages to changes in the cost of living. The greater the inflation rate, the more wages are raised.

Inflation rate

The percentage change in the price level.

4.2%

Current Unemployment Rate 2024

Structural Unemployment

The portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries

Efficient wage theory

An explanation for unemployment that holds that the productivity of workers increases with the wage rate. If this is so, firms may have an incentive to pay wages above the market-clearing rate.

2.7%

2024 inflation rate

Natural rate of unemployment

The unemployment that occurs as a normal part of the functioning of the economy. Sometimes taken as the sum of frictional unemployment and structural unemployment.

Sticky wages

The downward rigidity of wages as an explanation for the existence of unemployment

Explicit Contracts

Employment contracts that stipulate workers' wages, usually for a period of 1to 3 years

Minimum wage laws

Laws that set a floor for wage rates—that is, a minimum hourly rate for any kind of labor.

Expansion

A period in which output rises

Marginal propensity to consume

Fraction of a change in income that is consumed or spent

Philips Curve

Curve showing a relationship between Inflation and unemployment Rate.

Wage Theory

An explanation for unemployment that holds the productivity of workers increases with the wage rate is?

Consumption

Single Largest expenditure component in GDP?

1-MPC

What is MPS equal to?

Current dollars

Nominal GDP measures the value of all goods and services in?

Two Consecutive quarters

It has Become conventional to classify an economic downturn as a recession when aggregate output declines?

$29.36 Trillion

2024 Estimate GDP