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### 19 Cards in this Set

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 Pr = PI + D + CIT + UCP What is included in income approach? w (wages) r (rent) i (interest) Pr (profits) IBT (indirect business taxes) NFFI (GDP-GNP) KCA (capital consumption allowance OR depreciation) price index = prices in a given year ---------------------- prices in a base year % change in price = new price - old price --------------------- X 100 old price annual rate of inflation (ARI) = % change in price ----------------- number of years (n) RGDP = NGDP(nominal GDP) ---- PI (price index) ~df (in decimal form) Describe nominal GDP. Nominal GDP is unadjusted for inflation; it describes current dollar value. How can undemployment be determined? # of people unemployed ---------------------- X 100 # of people in labor force Who is in the labor force? 1. People age 16 and older 2. Not in armed forces 3. Actively seeking employment Structual Unemployment Change in technology; workers cannot compete Frictional Unemployment Qualified worker between jobs; time lags Cyclical Unemployment Unemployment resulting from downswing of business cycle. Name the 4 phases of a business cycle: 1. Expansion 2. Peak 3. Recession 4. Trough What is the natural rate of unemployment? minimal structual minimal frictional zero cyclical Full employment natural rate of unemployment; not zero unemployment aggregate demand all indvidual demand curves added together to include an overview of total economy What causes a shift in aggregate demand? Change in: C (personal consumption expen) I (gross private domestic inv) G (government expen) NX (exports - imports) Ms (money supply) e (exchange rate) T (taxes) tastes and preferences income # of consumers price of compliment/substitute expected income or prices What causes a shift in aggregate supply? Change in: technology cost of resources # of producers shocks (+ or -) Does depreciation in U.S. money (exchange rate)increase or decrease our exports? It will increase our exports, because it foreign countries can now buy more of our products at a lower price.