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69 Cards in this Set
- Front
- Back
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macroeconomics policies
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Government actions designed to affect the performance of the economy as a whole
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Average Labor Productivity
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Output per employed worker
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Average Labor Productivity Equation
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Total output ($) / number of workers in workforce
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Output Per Person
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Total output / number of people in economy.
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Recession
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Slowdown in economic growth
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Depression
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Severe slowdown in economic growth
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Expansion
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Period of rapid economic growth
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Boom
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Particularly strong expansions
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Unemployment Rate
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Fraction of people who can't find work but want to be employed
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Unemployment rate during recession
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Increases
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Inflation
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The rate at which prices in general are increasing over time
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Monetary Policy
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Determination of the nation's money supply
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Fiscal Policy
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Decisions that determine the government's budget, including the amount and compensation of government expenditures and government revenues
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Structural Policy
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Government policies aimed at changing the underlying structure, or institutions, or the nation's economy
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Central Bank
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Federal Reserve System, or the Fed
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Deficit
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Government spends more than it takes in in taxes
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Surplus
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Government spends less than they take in in taxes.
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Positive Analysis
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Addresses the economic consequences of a particular event or policy, not whether those consequences are desirable
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Normative analysis
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Addresses the question of whether or not a policy SHOULD be used; inevitably involves the opinion of the person doing the analysis
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Aggregation
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The adding up of individual economic variables to obtain economywide totals
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GDP means...
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Gross Domestic Product
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GDP is...
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The market value of final goods and services produced in a country during a given period.
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GDP measures...
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Output
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Finals goods or services
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Goods or services consumed by the ultimate user; counted in the GDP
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Intermediate goods or services
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Goods or services used in the production of final goods or services and therefore not part of GDP
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Capital good
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a long-lived good that is used in the production of other goods or services
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Women entering the workforce
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20-30 percentage points since 1960. Raised the GDP
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Value added
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For any firm, the market value of its product or service minus the cost of inputs purchased from other firms.
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Expenditure method for measuring GDP
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Adds the total dollar value of 4 categories together to calculate GDP
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4 Categories of Expenditure method or measuring GDP
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Consumption, Investment, Government Purchases, Net Exports.
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Expenditure Method: Consumption
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Spending by households on goods and services such as food, clothing, and entertainment
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Expenditure Method: Investment
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Spending by firms on final goods and services, primarily capital goods
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Expenditure Method: Government purchases
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Purchases by Fed, State, or Local governments. Doesn't include interest on government debt, or transfer payments which are things like Social Security or Welfare
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Expenditure Method: Net Exports
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Exports minus imports
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Equation for GDP
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Y = C + I + G + NX
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Three faces of the GDP
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Production, Expenditure, Income
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Three faces of GDP: Production
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Market value of final goods and services
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Three faces of GDP: Expenditure
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Consumption, investment, government spending, net exports
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Three faces of GDP: Income
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Labor income, Capital income
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Nominal GDP
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a measure of the GDP in which quantities are valued at current-year prices; nominal GDP measures the current dollar value of production
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Real GDP
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a measure of the GDP in which quantities produced are valued at the prices in a base year, rather than at current prices; measures the actual physical volume of production
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Difference between Real and Nominal GDP
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Real GDP is GDP adjusted for inflation, which allows comparisons over time.
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Underground economy
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Includes transactions that are never reported to government officials and data collectors
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Real GDP is not the same as economic well-being
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Does not incorporate other non-market economic activities
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Real GDP is RELATED to economic well being
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Real GDP is related to many factors that people value, like higher material standard of living, better health, higher rates of literacy and education, and longer life expectancies.
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Employment Status: Employed
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Has worked full-time or part-time during the past week or has been on vacation or sick leave.
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Employment Status: Unemployed
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Has not worked full-time or part-time during the previous week but has made some effort to find work in the past four weeks.
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Employment Status: Out of the labor force
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Has not worked in past week and has not looked for work in the past 4 weeks.
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Employment Status: Not part of the labor force
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Full-time students, retirees, unpaid homemakers, those unable to work due to disabilities, those under 16.
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Labor force
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The total number of people of employed and unemployed people in the economy
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Unemployment rate
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The number of unemployed people divided by the labor force
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Participation rate
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The percentage of working-age population in the labor force (the percentage that is either employed or looking for work)
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Costs of Unemployment: Economic
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Lost output, strain on government through Unemployment relief
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Costs of unemployment: Psychological
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Higher rates of depression, increased psychological stress for unemployed workers' family.
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Costs of unemployment: Social
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Violence, domestic abuse, alcoholism, drug abuse
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Unemployment Spell
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A period during which an individual is continuously unemployed
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Duration
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The length of an unemployment spell
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Long-term unemployment
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6 months or more
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Discouraged workers
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People who say they would like to have a job but have not made an effort to find one in the past 4 weeks.
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Involuntary part-time workers
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Workers who would like to have a full-time job but can only find part-time work
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Real quantities
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Quantities that are measured in dollars and then adjusted for inflation
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Consumer Price Index
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The cost in that period of a standard basket of goods and services relative to the cost of the same basket of goods and services in a fixed year (the base year)
The "cost of living" during a standard period. |
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CPI
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Consumer Price Index
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Bureau of Labor Statistics
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Agency responsible for determining he unemployment rate, as well as the official CPI
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Consumer Expenditure Survey
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How government learns how consumers allocate their spending during a typical year.
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Quality Adjustment Bias
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Whenever statisticians fail to adequately adjust for improvements to the quality of goods and services, thus overstating inflation (Which makes the CPI higher than TRUE INFLATION)
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Substitution Bias
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CPI measurement ignores consumers switching away from goods with rising prices (switching their "basket of goods")
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Price level
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Overall level prices at a particular point in time as measured by a price index such as the CPI
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Relative price
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The price of a specific good or service in comparison to the prices of other goods and services
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