Econ unit 11
Microeconomics (Micro) — study of individual consumers, firms, and markets
Macroeconomics (Macro) — study of the economy as a whole
Aggregate — total combined amount in the economy
Macro Analysis – The basic questions:
What to produce?
How to produce?
For whom to produce?
How fast is the economy growing?
Is the economy stable?
Gross Domestic Product (GDP = Y) — total value of final goods and services produced in a country in one year
Actual GDP — the amount currently being produced
Full Sustainable Capacity GDP (YF) — maximum output the economy can sustain without causing inflation
National Production — total output produced by a nation
Labor Force ( employed + unemployed )
Voluntarily Unemployed — people who choose not to work at the current wage
Unemployment Rate — percent of the labor force without jobs but actively seeking work
Frictional Unemployment — temporary unemployment while changing jobs or entering the workforce
Structural Unemployment — unemployment caused by changes in technology or job skills
Natural Rate of Unemployment — normal unemployment from frictional and structural causes
Full Employment (why doesn’t this = 0) — because frictional and structural unemployment always exist
Demand-Deficient Unemployment — unemployment caused by low overall demand in the economy
Inflation — rising general price levels over time
Deflation — falling general price levels over time
Price Level — average of current prices in the economy
Hyperinflation — extremely rapid inflation
Indexing — adjusting wages/payments for inflation
Real Value — value adjusted for inflation
Nominal Value — value not adjusted for inflation
Price Index — measure of average price changes over time
Price Deflator — index used to remove inflation from GDP
Consumer Price Index (CPI) — measure of prices paid by consumers for a basket of goods and services