Economics Final Exam Unit 4

Front 1

GDP

Back 1

-gross domestic product
-the market value of all final goods and services produced in the United States during a given period, usually a year
-primary rule: no double counting
-formula: C+I+G+(X-M)

Front 2

GDP per Capita

Back 2

-GDP divided population
-most important measure for comparing nations

Front 3

5 things GDP misses

Back 3

household activity, quality/variety, depreciation, underground economy, externalities

Front 4

Consumer Price Index

Back 4

lumps many goods together into one unit and then looks at how inflation affected that unit (unit is called a market basket)

-calculate: (newer year/base year)x 100

Front 5

aggregate demand and aggregate supply

Back 5

intersection shows price level(y-axis) and real GDP(x axis)
show an entire economy's demand for goods and services as well as an entire economy's supply of goods and services, for one year

Front 6

Nominal GDP

Back 6

GDP based on prices at the time of the transaction; current dollar GDP

Front 7

Real GDP

Back 7

the economy's aggregate output measured in dollars of constant purchasing power; GDP measured in terms of the goods and services produced

Front 8

4 sources of economic growth

Back 8

add resources, improve quality of existing resources, technology, better rules of game

Front 9

PPF grows with more capital goods made over consumer goods

Back 9

improves stock of resources

Front 10

labor productivity

Back 10

total output divided by hours of labor

Front 11

capital deepening

Back 11

improving both physical and human capital

Front 12

3 economic sectors

Back 12

agricultural, industry, service

Front 13

why the third world exists

Back 13

relative global inequality today

Front 14

basic research

Back 14

the search for knowledge without regard to how that knowledge will be used; a first step toward technological advancement; ie: universities

Front 15

applied research

Back 15

research that seeks answers to particular questions or applies scientific discoveries to develop specific products; ie: bionic arm

Front 16

pros and cons of technological change

Back 16

removes jobs, creates jobs
creates more jobs than it removes because it creates entire industries

Front 17

industrial policy and political spectrum

Back 17

communism, socialism, modern democracies, laissez faire capitalism, anarchy

Front 18

4 kinds of unemployment

Back 18

seasonal, frictional, structural, cyclical

Front 19

full employment

Back 19

occurs when there is no cyclical unemployment; relatively low unemployment

can be achieved through fiscal and monetary policy

Front 20

underemployment

Back 20

workers are overqualified for their jobs or work fewer hours than they would prefer

Front 21

unemployment rate

Back 21

the number of people looking for work (unemployed) divided by the number in the labor force

Front 22

labor force

Back 22

those in the adult population who are either working or looking for work

Front 23

labor force participation rate

Back 23

number in labor force divided by adult population

Front 24

unemployment benefits

Back 24

money provided to people who lose their jobs from cyclical employment

cons- people want to stay on them

Front 25

inflation

Back 25

an increase in the economy's general price level

Front 26

cost push inflation and demand pull inflation

Back 26

cost push=worst (economic contraction)
demand pull=economic growth bc higher equilibrium

Front 27

nominal interest rate

Back 27

not adjusted interest rate, the interest rate the bank gives you

Front 28

real interest rate

Back 28

nominal minus inflation

Front 29

4 schools of economic thought

Back 29

classical, Keynesian, monetarist, supply side

Front 30

the Laffer curve

Back 30

to increase dollar amount of taxes, raise tax rates
backward bending->raise taxes too high and people will opt out of work force