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53 Cards in this Set
- Front
- Back
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You use this for Macro?
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GDP Deflator
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You use this for Micro?
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CPI
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What are the 3 Main Macroeconomic Variables:
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1. Inflation
2. Unemployment 3. Productivity Growth |
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- Interest Rates Increase, Value of Dollar
- Price Level - % Increase in the Price Level |
Inflation
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% Decrease in the Price Level
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Deflation
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Inflation Increases by 50%
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Hyper-Inflation
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______________ usually occurs in developing countries
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hyper-inflation
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The total market value of all currently produced final goods and services sold over a period of time within a country
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GDP
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transaction that is recorded and a specific value attached to the product
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market value
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6 Types of Purchases GDP Excludes:
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1. Illegal purchases
2. Household production 3. Used goods 4. Transfer payments 5. Any sale on land 6. Intermediate goods |
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Two time frames during which GDP is measured?
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Quarterly, yearly
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defines a country
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geographic boundary
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Which product contributes more to GDP, the products are final goods.
a) a pound of hamburger within the USA b) a pound of caviar within the USA |
B; You care about the total market value
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Two Types of GDP:
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1. Nominal GDP
2. Real GDP |
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not adjusted for inflation (used in current prices)
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nominal GDP
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adjusted for inflation (constant prices/ base year prices/ chained year)
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real GDP
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______________ gives you a better picture of the economy because it adjusts for inflation and uses a base year price
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real GDP
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We use _____________ to find other variables.
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nominal GDP
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tells us the rise in nominal GDP that is attributable to a rise in prices rather than a rise in the quantities produced
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GDP Deflator
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In the base year, GDP Deflator is always ______
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100
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level of real GDP in which inflation has no tendency to accelerate or decelerate
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Natural Level of Real GDP
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Real GDP/ Population
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Real GDP per Capita
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Excludes those not actively seeking a job
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Unemployment
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4 Types Excluded by Unemployment:
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1. Those not actively seeking a job
2. Military 3. Those in institutions 4. Mentally disabled |
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3 Concerns with Unemployment Formula:
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1. Discouraged workers
2. Part-time vs. full-time employment 3. Underemployment |
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the rate of unemployment when there is no tendency for inflation to accelerate or decelerate
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natural rate of unemployment
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There is no natural rate of __________.
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inflation
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Duration: 1-5 years - Output, Unemployment, Inflation
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Short Run
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Duration: 1 - Several Decades
Productivity Growth |
Long Run
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Goal of Policy Makers?
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Minimize fluctuation in Real GDP
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2 Types of Policy Instruments:
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1. Monetary
2. Fiscal |
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Federal; changing money supply
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monetary policies
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Congress/Government; changing gov. expenditures and taxes
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fiscal policies
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2 Approaches for Spending:
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1. Income Approach
2. Expenditure Approach |
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4 Major Sectors of Economy:
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1. Households
2. Firms 3. Government 4. Rest of the world |
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earns interest
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capital
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earns wages
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labor
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earns rent
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land
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earns profit
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entrepreneurship
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4 Factors of Production in Income Approach:
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1. Capital
2. Labor 3. Land 4. Entrepreneurship |
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spending by households on goods and services with the exception of purchases of new housing
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consumption expenditure
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residential fixed investment
nonresidential/business fixed investment inventory investment |
investment expenditure
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spending on goods and services by local, state, and fed. gov. (no transfer payments)
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government purchases
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NX
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Net Exports
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Trade surplus normally used in _________________
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foreign investments
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Trade deficit normally used in __________________
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foreign borrowing
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Two Sources of Household Income:
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1. Income from production
2. Transfer payments |
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y+F
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household income
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3 Types of Allocation of Household Income:
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1. Consumption of goods and services
2. Savings 3. Taxes |
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c+s+r
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allocation of household income
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Tax Revenue + Transfer Payments
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Net Taxes
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portion of income that flows into income and taxes
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leakages
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trade balance and government balance less than zero
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twin deficit
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