Macroeconomics, Exam 2

studied byStudied by 1 person
0.0(0)
get a hint
hint

national income accounting

1 / 145

146 Terms

1

national income accounting

the techniques used to measure the overall production of the economy and other related variables for the nation as a whole

New cards
2

Price

Measure of value of a good or service

New cards
3

GDP

Final output dollar value

New cards
4

Intermediate goods

goods used in the production of final goods

New cards
5

GDP measurements

Exclude intermediate goods

New cards
6

GDP

Output produced within a nation's borders

New cards
7

Gdp

Makes it easier to compare economic activity globally

New cards
8

GDP per capita

Used by a measure of a country's standard of living, is gdp divided by population

New cards
9

Nonmarket activities

GDP measurements exclude goods/services produced but not sold

New cards
10

How much money in underground market?

$2 trillion

New cards
11

Gdp

Important use: measure how production changes every year

New cards
12

Real GDP

Nominal GDP/ Price Index

New cards
13

Nominal GDP

the value of final goods and services evaluated at current-year prices

New cards
14

GDP equals

National income

New cards
15

Real GDP=

(Nominal GDP/Price Index) x 100

New cards
16

GDP

Consumption + investments + government expenditures + exports + imports

New cards
17

statistical discrepancy

Makes up for nonmarket income

New cards
18

Personal income

pretax income received by households

New cards
19

disposable income

Personal income left after taking out taxes

New cards
20

unemployment & inflation

Two major economic problems

New cards
21

Unemployed person

No job & is actively seeking one

New cards
22

Loss of output

Cost of unemployment

New cards
23

Labor force

the total number of workers, including both the employed and the unemployed

New cards
24

Not labor force

Not working and not looking for work

New cards
25

Labor force shot up

From 1960-90 bc of women joining

New cards
26

Population growth and immigration

why does the labor force grow?

New cards
27

How much does the labor force grow by every year?

2 million workers

New cards
28

increases production possibilities

labor force growth

New cards
29

unemployment

idled resources- the economy operates inside the production possibilities curve and is inefficient

New cards
30

okun's law

1 percent more unemployment results in 2 percent decrease in gdp

New cards
31

unemployment rate formula

number of unemployed/ labor force

New cards
32

unemployment is higher for

men than women

New cards
33

unemployment is higher for

black and Hispanics more than whites

New cards
34

unemployment is higher for

less educated than highly educated

New cards
35

unemployment is higher for

teens than older

New cards
36

duration of unemployment

lowers when the economy is growing and rises when economy stagnates/declines--- the trend is the same as unemployment rate

New cards
37

reasons for unemplohment

1! lost job

New cards
38

2- reentrants

New cards
39

3-new entrants

New cards
40

4- left job

New cards
41

dicouraged workers

former job seekers who have given up and aren't looking for a job anymore

New cards
42

underemployed

people who want full time work in their field but can only find part time or work below their capacity--- still count as employed

New cards
43

phantom employed

pretend to look for a job to receive public assistance but don't actually want one-- still count as unemployed

New cards
44

human cost of unemployment

loss of income, loss of confidence, social stress, lost lives (suicide)

New cards
45

Full employment

not the same as no unemployment

New cards
46

full employment

the lowest unemployment rate compatible with price stability; zero cyclical unemployment--ranges between 4-6%

New cards
47

seasonal unemployment

seasonal work ends-- lawncare, etc--normal

New cards
48

frictional unemployment

brief period of unemployment experienced by people moving between jobs or into the labor market-- normal

New cards
49

structural unemployment

caused by a mismatch between skills or location of job seekers and requirements/ location of available jobs-- normal

New cards
50

cyclical unemployment

caused by decline in economic activity--not normal

New cards
51

inflation flashpoint

rate of output at which inflationary pressures intensify-- at or below 4% unemployment

New cards
52

changes in structural unemployment

come from changes in society

New cards
53

inflation

increase in average level of prices

New cards
54

Consumer Price Index (CPI)

a measure of the overall cost of the goods and services bought by a typical consumer

New cards
55

market mechanism

causes prices of individual goods and services to rise or fall

New cards
56

relative price

price of one good compared to price of other good,, buyers switch from one good to another when their relative prices diverge

New cards
57

inflation

is not a market function

New cards
58

effects of inflation

some prices rise and some fall

New cards
59

real income

income in constant dollars, adjusted for inflation

New cards
60

nominal income

income in current dollars

New cards
61

effect of inflation

can be seen in difference between nominal income and real income

New cards
62

inflation causes

a redistribution of wealth, seen in price changes, income changes, & wealth changes

New cards
63

price effects due to inflation

if you buy products whose prices rise faster-- you're worse off. if you sell faster-- you're better off

New cards
64

income effects due to inflation

nominal income rising slower than inflation- you're worse off

New cards
65

New cards
66

income rising faster than inflation-- you're better off

New cards
67

wealth effects due to inflation

assets declining in real value- worse off

New cards
68

New cards
69

assets increasing in real value- better off

New cards
70

money illusion

using nominal dollars rather than real dollars to gauge changes in one's income or wealth

New cards
71

macro consequences of inflation

uncertainty, speculation, bracket creep

New cards
72

uncertainty

not knowing prices of goods in the future makes purchasing & production decisions much harder

New cards
73

speculation

decisions shift from standard economic activity to betting on future prices of goods

New cards
74

bracket creep

in a progressive tax system, when nominal incomes rise, the taxpayer gets pushed into a higher tax bracket

New cards
75

deflation

a decrease in the general level of prices

New cards
76

New cards
77

redistributive effects-- opposite of those for inflation

New cards
78

GDP deflator

most accurate.

New cards
79

changes in prices of all goods and services are included, used to adjust nominal gdp to real gdp

New cards
80

before the 1930s...

people thought that a market driven economy was inherently stable (laissez faire)

New cards
81

classical economics

the economy "self-adjusts" to any deviations from its long-term growth.

New cards
82

New cards
83

wages and prices are flexible

New cards
84

say's law

supply creates its own demand

New cards
85

New cards
86

all that is produced will be sold, all who want employment will be hired at some point

New cards
87

macrofailure

self adjustment mechanism did not work- great depression

New cards
88

John Maynard Keynes

analyzed great depression- concluded that self-adjusted didn't happen bc of insufficient demand

New cards
89

New cards
90

suggested that the way out of depression was to buy more output

New cards
91

& employ more people

New cards
92

& provide more income transfers

New cards
93

& make more money available

New cards
94

For an overheated economy, Keynes proposed

-Higher taxes

New cards
95

-Gov spending reductions

New cards
96

-Reduce availability of money

New cards
97

business cycle

peak, trough, contraction, recovery

New cards
98

peak

gdp maximizes

New cards
99

contraction

gdp declines

New cards
100

trough

gdp minimizes

New cards

Explore top notes

note Note
studied byStudied by 539 people
Updated ... ago
4.0 Stars(5)
note Note
studied byStudied by 9 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 3 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 15 people
Updated ... ago
4.0 Stars(1)
note Note
studied byStudied by 6 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 62 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 1446 people
Updated ... ago
4.5 Stars(12)
note Note
studied byStudied by 26 people
Updated ... ago
5.0 Stars(1)

Explore top flashcards

flashcards Flashcard51 terms
studied byStudied by 104 people
Updated ... ago
5.0 Stars(2)
flashcards Flashcard120 terms
studied byStudied by 1466 people
Updated ... ago
4.2 Stars(5)
flashcards Flashcard42 terms
studied byStudied by 22 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard26 terms
studied byStudied by 18 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard127 terms
studied byStudied by 1 person
Updated ... ago
5.0 Stars(1)
flashcards Flashcard54 terms
studied byStudied by 1 person
Updated ... ago
5.0 Stars(1)
flashcards Flashcard112 terms
studied byStudied by 9 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard43 terms
studied byStudied by 6 people
Updated ... ago
5.0 Stars(1)