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40 Cards in this Set
- Front
- Back
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The sum of the money values of all final goods and services produced in the domestic economy and sold on organized markets during one year.
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GDP
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GDP Equation
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Y=C+I+G+NX
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something made to produce a final product ( a tire to a car) that is not included in GDP
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Intermediate Good
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What are main production factors?
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1. Workers
2. Capital 3. Technology |
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total output increases
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Growth
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total output declines (usually caused by a leftward shrift of aggregate demand curve)
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Recession
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Higher Employment
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Higher GDP
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Lower Employment
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Sustained Growth
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More Employment
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Recession
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Calculated by values at all prices (current market prices)
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Nominal GDP
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Quantity sold x the price (prices in a base year)
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Real GDP
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Produced in one country and sold in another
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GNP
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Measures increase in price level in one year
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Inflation
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Real + Expected Inflation
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Nominal Inflation
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Nominal - Actual Inflation
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Real Inflation
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Unemployment Reasons
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1. Cyclical
2. Structural 3. Frictional 4. Seasonal |
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unemployment based on the business cycle (recession, lay offs, etc..)
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Cyclical Unemployment
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unemployment due to being replaced by technology
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Structural Unemployment
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Unemployment due to being in-between jobs (College Students)
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Frictional Unemployment
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Unemployment if your job only lasts for certain amount of time a year
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Seasonal Unemployment
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Sum of Expenditures of 1. business firms in new plant and equipment
2.households in new homes |
Investment Spending
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What is not included in Investment Spending?
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1. Financial "Investments"
2. Re-sales of existing physical assets |
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Aggregate Demand Equation
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C+I+G= National Income
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National Income =
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Domestic Product (GDP)
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GDP=
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Aggregate Demand
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total income of all individuals in economy minus the taxes paid and plus transfer payments received
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Disposable Income
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Disposable Income is also called the _________?
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Consumption Function
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Consumption Function =
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DDP-(Taxes- Transfers)
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Linear Function =
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A+b*DI
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Slope (b) =
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Vertical Change / Horizontal Change
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ratio of changes in consumption to changes in disposable income
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Marginal Propensity to Consume
(MPC) |
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Slope of the consumption Function
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Marginal Propensity to Consume (MPC)
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MPC equation
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Change in C / Change in DI that produces the change in C
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movement along the consumption function
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changes in DI
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Factors that Shift the Consumption Function
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1. Wealth-stockmarket, house price
2. Expected Higher price level 3. Future Income Expectations |
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Kenyesian Theory
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Cross
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Neo-Classical Theory
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Liberal
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shows the relationship between national income and total spending
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Expenditure Schedule
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when the potential GDP is higher than the actual GDP
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Recessionary Gap
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when the actual GDP is higher than the potential GDP
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Inflationary Gap
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