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44 Cards in this Set
- Front
- Back
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what is a reason for having to trade
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when a country cant produce a variety or quantity of goods and services to meet domestic demand
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what is the effect of specialization and international trade on productivity
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-increases productivity
-greater total output |
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specialization and trade are mutually beneficial to the two nations if...
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the comparative costs of production within the two nations differ
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when does a country have a comparative advantage
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when it can produce a product at a lower domestic opportunity cost than can a potential trading partner
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what is the effect of exchange rates on US imports and exports
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-when US dollar is weaker, the price of goods oversees is cheaper
-when US dollar is stronger, the price of goods oversees is more expensive |
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definition of GDP
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the total market value of all final goods and services produced in a given year
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the total market value of all final goods and services produced in a given year
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GDP
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what are final goods
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products that are sold to the consumers for final use
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two types of non production transactions
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-purely financial transactions
-secondhand sales |
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expenditures approach to GDP
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view GDP in terms of the income created from producing it
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what factors do we use when measuring GDP in the expenditures approach
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consumer consumption
gross investments government purchases net exports |
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what is disposable income
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personal income minus personal taxes
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difference between nominal GDP and real GDP
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real GDP= nominal - inflation
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what is price index
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a measure of the price of a specified collection of goods and services in a given year in comparison within a set year
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what are 2 shortcomings of GDP as a measure of total output and wellbeing
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-underground economy
-leisure (you can do things quicker now) |
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2 ways economists define and measure economic growth
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-increase in real GDP
-increase in real GDP per capita |
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an economy that is experiencing economic growth is better able to...
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meet people's wants and solve economic problems
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growth lessens the burden of
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scarcity
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2 main sources of growth
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-1/3 more imports
-2/3 improved productivity |
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productivity is...
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the real output per unit of input
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most economists believe that the immediate cause of cyclical changes in the level of real output and unemployment is...
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change in the level of total spending
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T of F once the economy nears full employment, further gains in real output become more difficult to achieve
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True
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what is the effect of the business cycle on durable goods
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durable goods are hit harder than non durable goods
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why is the purchase of durable goods considered discretionary
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households will often defer the purchase of these goods in hard time
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what are the twin problems that arise from the business cycle
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inflation and unemployment
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what is the process of measuring the unemployment rate
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by grouping the population
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when grouping the US population, what are the 3 groups
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-under 16 or institutionalized
-not in the labor force or looking for a job -employed |
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difference between people in the labor force and not in the labor force
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people in the labor force are willing and able to work
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what are the 3 types of unemployment
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- frictional
-structural -cyclical |
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frictional unemployment
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people searching for a job or waiting to take a job
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structural unemployment
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people need some training to find a new job because the market on their labor has changed slightly
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cyclical unemployment
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results from insufficient demand for goods and services
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what type of unemployment is people searching for a job or waiting to take a job
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frictional
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what type of unemployment is people need some training to find a new job because the market on their labor has changed slightly
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structural
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what type of unemployment results from a insufficient demand for goods and services
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cyclical
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there is no cyclical unemployment when...
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there is full employment
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can you have 100% employment and why or why not
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no, it takes time to find a job
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NRU stands for
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national rate of unemployment
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national rate of unemployment is...
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when job seekers meet jobs available
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inflation is...
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the rise in the general level of prices
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what is the main measure of inflation
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consumer price index (CPI)
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what does the CPI (consumer price index) report
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the price of a market basket of consumer goods and services
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who is hurt by inflation
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people with fixed income
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who is helped by inflation
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people with fixed debt
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