Untitled Flashcards Set

Flashcard #1
Term: GDP (Gross Domestic Product)
Definition: GDP measures the total value of all final goods and services produced within a country in a given period.

Flashcard #2
Term: GDP Formula
Definition: GDP = Consumer Spending + Business Investments + Government Spending + Net Exports (Exports - Imports)

Flashcard #3
Term: Unemployment Rate
Definition: Measures the percentage of the labor force that is unemployed and actively seeking work.

Flashcard #4
Term: Inflation
Definition: The general increase in prices and the decline in purchasing power over time.

Flashcard #5
Term: Recession
Definition: A period of economic downturn when output and employment are falling.

Flashcard #6
Term: Expansion
Definition: A period of economic upturn when output and employment are rising.

Flashcard #7
Term: Business Cycle Peak
Definition: The highest point before the economy starts to decline.

Flashcard #8
Term: Business Cycle Trough
Definition: The lowest point before the economy starts to recover.

Flashcard #9
Term: Long-Run Economic Growth
Definition: The sustained upward trend in the economy’s output over time.

Flashcard #10
Term: Deflation
Definition: A decrease in the general price levels of goods and services.

Flashcard #11
Term: Inflation Discourages People From…
Definition: Holding onto cash because its value decreases over time.

Flashcard #12
Term: Deflation Has the Opposite Problem Because…
Definition: The value of money increases, leading to reduced spending.

Flashcard #13
Term: Price Stability
Definition: When inflation and deflation are kept to a minimum to maintain economic stability.

Flashcard #14
Term: Open Economy
Definition: An economy that engages in international trade.

Flashcard #15
Term: Trade Deficit
Definition: When a country imports more than it exports.

Flashcard #16
Term: Trade Surplus
Definition: When a country exports more than it imports.

Flashcard #17
Term: National Income and Product Accounts (NIPA)
Definition: A system used to measure economic activity in a country.

Flashcard #18
Term: Circular Flow Diagram
Definition: A model showing the flow of money, goods, and services in an economy.

Flashcard #19
Term: Stock
Definition: A share of ownership in a company.

Flashcard #20
Term: Bond
Definition: A loan made to a company or government with the promise of repayment with interest.

Flashcard #21
Term: Government Transfers
Definition: Payments by the government to individuals without receiving a good or service in return (e.g., Social Security).

Flashcard #22
Term: Disposable Income Formula
Definition: Disposable Income = Income + Government Transfers - Taxes

Flashcard #23
Term: Private Savings Formula
Definition: Private Savings = Disposable Income - Consumer Spending

Flashcard #24
Term: Final Goods and Services
Definition: Goods and services sold to the final consumer.

Flashcard #25
Term: Intermediate Goods and Services
Definition: Goods used to produce final goods and services.

Flashcard #26
Term: Aggregate Spending
Definition: The total spending in an economy on domestically produced goods and services.

Flashcard #27
Term: Value Added of a Product
Definition: The increase in value of a product at each stage of production.

Flashcard #28
Term: Major Component of GDP
Definition: Consumer spending makes up the majority of GDP.

Flashcard #29
Term: Included in GDP
Definition: Domestically produced final goods and services, including capital goods, new construction, and inventory changes.

Flashcard #30
Term: Not Included in GDP
Definition: Intermediate goods, used goods, financial assets (stocks/bonds), foreign-produced goods, and informal services.

Flashcard #31
Term: Real GDP
Definition: GDP adjusted for inflation.

Flashcard #32
Term: Aggregate Output
Definition: The total quantity of goods and services produced in an economy.

Flashcard #33
Term: Nominal GDP
Definition: GDP measured in current prices without adjusting for inflation.

Flashcard #34
Term: Chained Dollars
Definition: A method of calculating real GDP using average growth rates to adjust for inflation.

Flashcard #35
Term: GDP Per Capita Formula
Definition: GDP Per Capita = GDP / Population

Flashcard #36
Term: Real GDP Per Capita
Definition: Average real GDP per person, used to compare economic growth between countries.

Flashcard #37
Term: How to Calculate Real GDP
Definition: Use the base year prices to measure GDP across different years.

Flashcard #38
Term: Who Is Hurt During a Recession?
Definition: Workers lose jobs, businesses close, and overall spending decreases.

Flashcard #39
Term: Who Benefits During an Expansion?
Definition: Businesses grow, employment rises, and consumer spending increases.

Flashcard #40
Term: Definition of Employment
Definition: Being actively working for pay.

Flashcard #41
Term: Definition of Unemployment
Definition: Actively seeking work but not currently employed.

Flashcard #42
Term: Labor Force Formula
Definition: Labor Force = Employed + Unemployed

Flashcard #43
Term: Labor Force Participation Rate Formula
Definition: (Labor Force / Population Age 16 and Older) * 100

Flashcard #44
Term: Unemployment Rate Formula
Definition: (Number of Unemployed Workers / Labor Force) * 100

Flashcard #45
Term: Discouraged Workers
Definition: People who have given up looking for work.

Flashcard #46
Term: Marginally Attached Workers
Definition: People who recently looked for work but are not currently searching.

Flashcard #47
Term: Underemployed Workers
Definition: Part-time workers who want full-time jobs or overqualified workers in lower-skilled jobs.

Flashcard #48
Term: Jobless Recovery
Definition: A period of economic growth without job creation.

Flashcard #49
Term: Types of Unemployment: Frictional Unemployment
Definition: Temporary unemployment during job transitions.

Flashcard #50
Term: Types of Unemployment: Structural Unemployment
Definition: Job loss due to changing industries or technological advancements.

Flashcard #51
Term: Types of Unemployment: Cyclical Unemployment
Definition: Unemployment caused by economic downturns.

Flashcard #52
Term: Labor Unions
Definition: Organizations that negotiate for workers’ rights and wages.

Flashcard #53
Term: Efficiency Wages
Definition: Wages set above market level to increase worker productivity.

Flashcard #54
Term: Natural Rate of Unemployment Formula
Definition: Natural Rate = Frictional Unemployment + Structural Unemployment

Flashcard #55
Term: Cyclical Unemployment Formula
Definition: Cyclical Unemployment = Total Unemployment - Natural Unemployment

Flashcard #56
Term: Causes of Changes in Natural Unemployment Rate
Definition: Labor force characteristics, labor market institutions, and government policies.

Flashcard #57
Term: Inflation Rate Formula
Definition: ((Price Level in Year 2 - Price Level in Year 1) / Price Level in Year 1) * 100

Flashcard #58
Term: Shoe Leather Costs
Definition: Costs of extra transactions due to inflation.

Flashcard #59
Term: Menu Costs
Definition: Costs of changing listed prices due to inflation.

Flashcard #60
Term: Unit of Account Costs
Definition: Uncertainty in economic calculations due to inflation.

Flashcard #61
Term: Nominal Interest Rate
Definition: Interest rate before adjusting for inflation.

Flashcard #62
Term: Real Interest Rate Formula
Definition: Real Interest Rate = Nominal Interest Rate - Inflation Rate

Flashcard #63
Term: Price Index Formula
Definition: (Cost of Market Basket in Given Year / Cost of Market Basket in Base Year) * 100

Flashcard #64
Term: Consumer Price Index (CPI)
Definition: Measures inflation by tracking the price of consumer goods.

Flashcard #65
Term: Producer Price Index (PPI)
Definition: Measures inflation at the producer level.

Flashcard #66
Term: GDP Deflator Formula
Definition: 100 * (Nominal GDP / Real GDP)

Flashcard #67
Term: Rule of 70 Formula
Definition: Time to Double = 70 / Annual Growth Rate

Flashcard #68
Term: Factors Affecting Economic Growth
Definition: Physical capital, human capital, and technological progress.

Flashcard #69
Term: Aggregate Production Function
Definition: Shows how input changes affect output.

Flashcard #70
Term: Why Does Aggregate production level Have Diminishing Returns?
Definition: Each additional input increases output by a smaller amount.

Flashcard #71
Term: Why is Aggregate Demand Downward Sloping?
Definition: Due to the wealth effect and interest rate effect.

Flashcard #72
Term: Aggregate Demand Shifters (SEWFM)
Definition: S: Size of stock of physical capital, E: Consumer expectations, W: Consumer wealth, F: Fiscal policy, M: Monetary policy

Flashcard #73
Term: Aggregate Supply Shifters
Definition: Nominal wages, commodity prices, productivity.

Flashcard #74
Term: Long-Run Aggregate Supply
Definition: Represents full employment output.

Flashcard #75
Term: Technological advancements
Definition: Increases efficiency and shifts the curve to the right.