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19 Cards in this Set
- Front
- Back
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shifts in demand curve |
1. consumer change 2. population change 3. consumer preference 4. price/availability of related goods |
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shifts in supply curve |
1. size of industry 2. tech progress 3. price of inputs 4. price of related outputs |
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nominal GDP |
-calculated at current price -does not account for increases in actual production if prices rise -"current" dollars |
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real GDP |
-calculated by valuing outputs of different years at common prices -constant dollars |
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during a recession, there is a _____ward shift of the demand curve |
left |
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price ceiling |
government imposed price control or limit on how high a price is charged for a product |
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limitations of the GDP |
-NOT a measure of the nation's well-being -includes only market activity -places no value on leisure -counted: "bads" and "goods" -ecological costs not netted out of GDP |
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potential GDP |
1. real GDP the economy would produce if labor and other resources were fully employed 2. growth rate depends on: -growth rate of labor force -growth rate of capital stock -rate of technological progress |
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GDP equation |
hours of work x labor productivity |
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frictional unemployment |
normal turnover, people are temporarily in between jobs |
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structural unemployment |
people lose their jobs because their skill set is no longer in demand or needed |
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cyclical unemployment |
unemployment due to the normal economy, with recessions. will go back to normal as economy restores |
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nominal interest rate equation |
real interest rate + expected interest rate |
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3 pillars of productivity growth |
1. rate at which economy builds up its stock of capital 2. rate at which technology improves 3. rate at which workforce quality is improving |
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role of the government |
1. making and enforcing laws 2. regulating businesses 3. providing certain goods and services (such as national defense) 4. levying taxes 5. redistributing income |
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to speed up capital formation, the government must somehow persuade private businesses to invest more, these 5 things are needed: |
1. lower real interest rates 2. tax provisions 3. technical changes 4. growth demand 5. political stability |
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Disposable income equation |
GDP - (taxes - transfers) Y - T |
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MPC |
-marginal propensity to consume -change in c/change in DI that produce change in C |
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shift of the C function |
-wealth -price level -real interest rate -future income expectations |
