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28 Cards in this Set
- Front
- Back
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GDP
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Market value of final goods and services produced in an economy over a specific time period.
Gross Measure-NOT-Net Measure Recorded if produced on U.S. soil |
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Intermediate goods (ingredients)
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not involved in GDP. market value is reflected as "value"
EX. Auto Production: glass, plastic, steel |
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Transfer payments (soc. secur. payment)
Non-Market transactions (painting my house) but changes value of the house. Used goods Illegal Goods/services (that nah nah) Financial Transactions (stock, land exchange) |
GDP Excludes
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Net Domestic Product (NDP)
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GDP - Deppreciation
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Gross National Product (GNP)
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Measures national output produced by U.S. REGARDLESS of location
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National Income
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earned by factors of production.
Some is earned but not received (corporation profit) Some is received but not earned (Soc. Secur.) |
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Disposable Income Yd
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Disposable Income Yd
personal income (income tax) Spend (C) (*nock*) or save (S) Yd=Y-T T=net taxes (taxes-trans.paym.) Yd=c+s Income (Y) = Output = Spending (C) Output = GDP = Income (Y) |
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Measuring GDP
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Spending on final goods/services in:
1) Household 2) business 3) Government 4) Rest of the world |
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Measuring GDP: "House Sector"
C |
Consumption (C)
LARGEST IN GDP (68%) 3 Categories -durable goods (auto furniture)--[smallest of "C" but volatile] -nondurable goods (clothes food) -services (health transportation)--[largest of "C"] |
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Measuring GDP: "Business Sector"
I |
Investment (I) (16%) [most volatile]
(gross private domestic investment) economic investments NOT FINATIAL 3 Categories -fixed Invest. (equip. building)<---Business -Residental Invest. (New housing) -Inventory Invest. (what was bought and not sold) |
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Measuring GDP: "Government Sector"
G |
Government purchases of goods and services (G)
18% |
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Measuring GDP: "Rest of the world sector"
Nx |
Net Exports (Nx) (2.3%)
exports and imports -net exports have been (-) in US for awhile if Nx <0 => "trade deficit" |
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GDP present
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Q4 of 2013
-real GDP 15.9565 trillion -grew 3.2% SAAR in Q4 -grew 4.1% SAAR in Q3 |
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Nominal GDP (Current)
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GDP expressed in billions of dollars
GDP=P(2013)*Q(2013) |
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Real GDP
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GDP expressed in billions of chained[prices are held constant] (2009) dollars
--Inflation adj., physical units, and (Constant P/chained dollars)-- GDP=P(2009)*Q(2013) <----chained dollars |
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PerCapita Real GDP
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most meaningful measure of material well-being
Real GDP/population ___Doesn't correlate with social indicators of human progress____ In 2013 Real GDP PerCapita was 50,000 compared to 1870's 3,000 (improvement in material living standards) |
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Inflation (change in overall prices)
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1970 Gerald Ford Campane: W.I.N(wip inflation now)
Why inflation matters: creates uncertainty for econ. dession makers "shoe leather costs"-poeple using their time to protect themselves from inflation "Menu costs"- resources used to reproduce Wealth redistribution- high inflation transfers resources from lenders to buyers |
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Measuring Inflation
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change in overall level of prices
GDP deflator (every 3 months [all prices]) -ratio of overall p-level in 1period vs 1yr {look at notes} CPI(consumer price index) (every month [only consumer prices]) |
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Interest Rates
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market interest rates (nominal): observed
Nominal interest rates=inflation rate + real interest rate(real cost of borrowing) Inflation rates(incre.)=nominal rates(incre.) real interest rates=no chance Real IR=nominal - inflation rate __during the great depression(1929-33) fell by 10% each yr. nominal interest rates = 1%__e |
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what's wrong with CIP (Consumer Price Index)
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1. Quantity Change: new car p(incre.) b/c q(incre.)
2. Intro of new goods: new tech reduce C.G.S 3. Substitution Bias: results from CPI as a "fixed market" basket of iteams |
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Unemployment and employment
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Bureau of Labor Statistics
announced the 1st friday of the month. Unemployment-adult not working and seeking work Adult population (16+) If not employed this doesn't mean person is unemployed If unemployed and give up search => UnR to fall Unemployment rate: (# unemployed/# labor force)*100 -jan 2014 UnR 6.6% |
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emplyment situation
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2 key elements
Household servey's -to determine size of labor force and unemployment Establishment survey's -if employed for 1hr+/week including 12th day of month -ask businesses about workers on there payrolls(change in "total employment") |
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Labor Force
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Unemployment is related to labor force
adults who are employed or unemployed Labor Force= Employed + Unemployed [LFPR]Participation rate: (# labor force/#adult pop.)*100 -2014=>63% |
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Labor force participation
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Baby boom 1946-64 (retirement age)
-Causes LFPR to decrease 1950s-60s increase in females |
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Unemployment in the long run
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Natural rate of unemployment (Un)
-long run, normal, full employment, long run equalibrium -no cyclical unemployment (econ. not performing at potential level) Uc long term: Uc=0 2 types of unemployment that happen in long run 1. Frictional Unemploy. (Uf) 2. Structrural Unemploy. (Us) Determinantes: Unemploy. Insurance- normal(have access to UI for 26 weeks) recently 99 weeks |
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Frictional unemployment (job search)
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related to imperfect info in labor markets(finding jobs), matching probs in L.M., geographic immobility(family moving)
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Structural Unemployment (Natural)
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painful in market econ.
public policy: assist w/ raising edu, assist w/ retraining Value of NR of Unemploy.: ***Not directly observable*** NR=avg. Unemploy.R 4-6.5%-long run Unemploy 5-5.6%-longer run |
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5 key trends in a labor market
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1. [20th cent.] all industrial countries experienced significant growth in real wages
2. [1970s] the rate of real wage growth has slowed (1950-60 wage gains) |
