econ unit 4

Gross Domestic Product

the market value of all final goods and within countries national border in a year 

Nomial GDP

measures current GDP, expressed in dollars

• no adjusting for inflation

Real GDP

measure GDp inconsistent dollars, so that comparisons can be made between years

• remove sinflation and distortion

GDP Per Capita

nations real GDP (take out inflation) divided by population

• per person basis 

• measure of society’s standard of living 

Limits of GDP

excludes:

1. intermediate products 

2. unpaid work

3. Informal economy 

GDP Productivity excludes 

Labor Force

Causes of Business Cycle

Economic indicators

Expansion

Peak

Contraction

Through

Recession

Depression

really bad recession 

Employed

Unemployed

Civilian Labor force

unemployment rate 

labor force participation rate

Frictional

Structural

Seasonal 

Cyclical

Who is helped/hurt by jump in inflation

Effects of Inflation

Inflation 

price change

normal rate of inflation

deflation

hyperinflation 

Causes of Inflation

increase in money supply 

demand pull inlfation 

cost push inflation 

wage price spiral

price index

calculating price change

market baseket

base period 

reference point

base period=100

CPI calculation

(weighted cost of items in current year/ weighted cost of items in base year) x 100

final goods

finished products sold directly

intermediate goods

used in the production of other goods and services

informal economy EXCLUDED IN GDP

underground, occasional barter,

unpaid work EXCLUDED IN GDP

volunteer household

intermediate products EXCLUDED IN GDP

second sales