economics preformance

What are microeconomics

specific behaviors and decision making on a small scale

what are macroeconomics

study national and global economic trends, help policy makers, business and individuals make informed decisions

what does inflation do to the value of a dollar

decreases it

a sustained rise in the level of prices or a sustained fall in buying power is known as

inflation

what is the best measure of national economic growth

real gdp

when gdp is adjusted for change in market prices it is known as?

real gpd

what is the reason cloth made in the US would not be counted a GDP

cloth is an intermediate good since it can be used to make a final good. Only final goods count.

What are the 3 economic goals

Economic Growth, Full Employment and Price Stability

what are the two markets that always exist?

product market and factor market

product markets, and factor markets both involve what

consumers and producers at all times

Why is GDP important to show value in goods and services

shows healthy economy with increasing production and consumer spending

What is Consumer Price Index

Measures Change in prices of everyday goods and services

What is Product market

a market where goods and services are bought and sold

What is a factor market

Market for factors of production ( land , labor, capital and entrepreneur ability )

In factor markets, firms are ____

Consumers

In factor markets Households are _____

Producers

In product markets firms are

Producers

in product market house holds are

Consumers

Labor force population

Number of people in a country 16+

Labor force

Number of people in a country that are classified as either employed or unemployed

Labor force participation rate

Percentage of working age population in the labor force

what is the US’s labor, force participation rate?

66%

what is the employed?

People who work for pay at least one hour every two weeks also people 16 years and older that have a job doesn’t matter if it’s a part-time or full-time as long as they work one hour every two weeks

what is unemployment

People who are out of work but looking also people 16 and older that do not have a job, but have actively searched for a job in the last four weeks

not in the labor force

Kids, military, retired people, stay at home mom and dad’s, the full-time students house and discouraged workers

what is frictional unemployment?

Between jobs, voluntary leave, good for individuals and society

what is structural unemployment?

Associated with lack of skills or declining industry can easily be replaced by machine

what is cyclical employment?

Associated with downturns in business cycle, bad for society and individuals

what is seasonal unemployment?

landscapes, vacation area workers, etc

what are some examples of cyclical unemployment?

recession, declining, consumer, demand, layoffs

what is full employment?

The levels of unemployment experience when the economy is producing at full potential

what is the US’s national rate of unemployment?

4 to 6%

how long is it to be considered a recession?

Six months

what is the formula for labor force?

Number of employees + number of unemployed

what is the formula for unemployment rate?

Number of unemployed / labor force x 100

what is the formula for labor force participation rate?

Labor force / adult population x 100

what is consumption

spending on durable goods, non durable goods, services

investment

business spending on capital and investoriesn

business spending on capital

spending in order to increase future output or productivity

what are investories

business assets that are ready to be ge sold

government purchases

all levels of government spending on final goods and services and infrastructure toward GDP

what does federal spending fall under

government purchases

federal spending is what

defense and non defense ( funding for health buildings , state / local spendings)

net exports

exports and imports

what are exports

creates a flow of money to the U.S. in exchange for domestic production

what are imports

create a flow of money away from the U.S. in exchange for foreign production

what is the formula for net exports

Export - Imports = Net exports

What is not counted in GDP

Intermediate goods, second hand sales, transfer payments from the government, financial transactions, non market transactions and black market economy

What is a example of transfer payments

welfare, social stability and social security

What is non market transactions

economic activity’s, goods or services exchanged without payment

examples of non market transactions

cooking at home, volunteering

intermediate goods

raw materials, components or services used as inputs in production process to create finish goods or intermediate

what are examples of intermediate goods?

tires purchased from car manufacturer

what are transferred payments from the government?

One way government expenditures given to individuals or organizations

what is an example of financial transactions?

stocks, materials, and bonds

what is the definition of net exports?

value of its total exports minus the value of its total import

what is a scenario example of net exports?

A company exports $5 billion worth of goods and imports 4 billion inputs resulting in 1 billion of exports

when you import you are losing money for what?

US GDP

what is the business cycle?

A periodic rise and fall and economic activity, measured by changes in GDP

what is the peak in the business cycle?

temporary maximum in real GDP top of the cycle where expansion stops and is ready to decline or contract

what is recession in the business cycle?

Contractionary Phase where there is a period of decline in real GDP in an increase in unemployment rate

what is trough in the business cycle?

bottom of the cycle where GDP is added its lowest unemployment is high in inflation rate is low

what is expansion in the business cycle?

phase where the economy is returning to full employment has maximum generation of GDP, and a low and unemployment rate

When the business cycle is at peak, what is the unemployment rate like?

in this phase unemployment is going to be down

in the peak phase of business cycle, what is the GDP going to be at?

The highest at this point

in the recession phase of the business cycle, what is GDP going to be like?

starting to go down

what is the unemployment going to be like during recession?

up and increasing slowly

in the business cycle during phase trough what is the unemployment rate like?

at the lowest point

in the phase of trout in the business cycle, what is unemployment rate going to be like?

lowest point and increasing

during expansion phase of business cycle, what is GDP going to be like?

growing and increasing for recovery

in the expansion phase of the business cycle, what is unemployment rate going to be like?

going to decrease forming recovery

in the peak phase of the business cycle, what is price level is going to be like

moderate at level

in the recession phase and trough, what price level was going to be like?

not a problem

in expansion phase, what are price levels going to be like?

increasing and rising

Factor markets ( four factors of production ) produce what for households

income

When households receive their income, they spend their money where

at product markets ( goods n services)

once these product markets build up revenue where does it get sent to?

firms

when the firms receive the money from product markets how do they use it and who does it go to?

firms use it for rent, interest, wages, and profit and send this to the factor market

The factor markets are going to produce what for firms

land, labor, capital and entrepreneur ability

when firms receive the four factors of production from the factor markets, what do they use this for?

they send these and firms produce goods and services for the product markets

when the product markets have received their goods and service services from firms, what happens next

product markets, send goods and services to households

once households have received their goods and services what happens

households provide land, labor, capital entrepreneur ability for factor markets

A monthly check received by an economic student who has been granted a government scholarship is an example of what

excluded in GDP

A farmers purchase of a new tractor is an example of what in GDP

included in GDP

you spend seven dollars to attend a movie. What is this in GDP?

consumption

A family pays a contractor $100,000 for a home he built for them this year. This is example of what in GDP.

investment

The government increases its defense expires by 1 million . This is an example of what in GDP.

Government

you buy a new Toyota that was made in Japan. This is an example of what in GDP

net exports

A corporation sold designer shirts at a department store. This is going to affect the circular flow model how

firms are going to send products to product market

developers hired five new computer programmers .This is going to affect the circular flow model how

resource / factor market is being sent to firms

just spent $25 for a meal at a local restaurant . This is going to affect the circular flow model how

households are sending money to product market

what is CPI?

The overall cost of goods and services bought by a consumer

CPI measures what

Inflation

The Bureau of Labor Statistics does what

Reports the CPI each year by creating and updating in order to calculate percentage rate of increase for overall basket

when CPI rises, someone typically has to spend what

more money to live the same standard of living

what allows us to adjust to CPI increasing?

Pensions, Medicare, cost-of-living and wage increases

what is the target rate of inflation?

2%

when searching for CPI what is the formula?

Market Basket year YOUR looking for divided by Market Basket for BASE year X 100