unit 3-4 econ test

GDP

Value of all goods and services in a year

Expansion/Trough

E: Gdp growth (more spending, less unemployment, inflation steady)

T: Economic activity declines (before expansion)

Leading indicators

Predicts direction of economy: building permits, stock market, CPI

CCI: Consumer confidence index

Good or bad views of how consumers spend their money

GDP per capita

Spending per person

Real GDP

A years value of goods/services BUT includes inflation adjustment

Reserve requirement

FED forces banks to reserve money for withdraws it CANNOT be lent out (reserved)

Cost-push inflation

Prices increase due to cost of ingredient prices going up (decrease in supplies)

Wage spiral

Increased wages causes increase in price of goods

CPI: consumer price index

Survey that examines average prices of goods/services

Discount rate

Interest charged to banks for short term loans from FED

Demand pull inflation

Lots of demand not enough product, but prices will go up

Expansionary vs contractionary policy

E: Economy growth= need to slow it down

C: Economic decline= need to speed it up

Types of unemployment

frictional: willing/temporary, seasonal: ice cream job/temporary, technological: robots take over, structural: locations move, cyclical: economic decline