Unit 4 Economics Review

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prolonged period of high unemployment and severe consumer shortages

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depression

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jobs lsot as workers are replaced by machines

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technological unemployment

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the cost of borrowing money

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interest

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annual wage or salary before taxes

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personal income

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federal spending and taxing policies to influence economic activity

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fiscal policy

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undistributed corporate profits

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retained earnings

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federal lprograms for social welfare

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entitlements

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lowest possible unemployment rate

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full employment

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offical count of all people in the US

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census

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tracks changes in prices for common consumer items

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consumer price index

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The purpose of the market basket is to

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keep track of prices of consumer items

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THe dollar value of all final goods, services, and structures produced within a country's national borders during a 1 year period is

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Gross Domestic Product

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Statistics on the nation's output and income are compiled by the Department of

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Commerce

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The consumer sector of the economy is composed of

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households

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TO arrive at the real GDP per capita figure

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divide the real GDP by the total population

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The census is taken every

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10 years

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A recession occurs when

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real GDP declines for six months in a row

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The beginning of the Great Depression in 1929 was marked by the

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stock market crash

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Exampls of automatic stabilizers does NOT include

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supply-siode economics

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The degree of income inequality among families is demonstrated by the

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Lorenz curve

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Government programs for low-income assistance are determined by

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poverty threshold statistics

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Workfare is an government program to

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employ able-bodied welfare recipients

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If there is an increase in aggregate supply with no corresponding increase in aggregate demand

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Real GDP increases and the price level goes up

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A period of inflation and sluggish or no economic growth is called

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stagflation

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A measure of consumer suffering during periods of high inflation and high unemployment is called

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misery index

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GDP means

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total output of final goods, services, and structures that are produced within a country's borders in one year.

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GNP

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is the dollar value of all final goods, services and strudctures produced in one eyar with labor and property supplied by a country's residents. This one includes outside the country involvement.

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Define creeping and galloping inflation

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Creeping inflaction is 1-3 % a year and galloping inflastion is 100-300% a year. INfalction can cause an increase in cost of living, prices increase affecting people of fixed incomes. The purchase of homes and household goods decline and interest rates icnrease

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employees in professional fields who generally receive salaries

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white-collar workers

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measure of manufacturer's price changes

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producer price index

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aggregate supply equal to aggregate demand

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macroeconomic equilibrium

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a rise in the general price level

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inflation

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federal-state program of health care for low-income individuals

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medicaid

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periodic fluctuations in economic conditions

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business cycle

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take-homepay after taxes are withheld

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disposable personal income

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quality of life based on possession of necessities and luxuries

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standard of living

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decrease in the general price level

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deflation

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the larges of all the National Income and Product account measures is

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GDP

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GNP is a measure of __ whereas GDP is a measure of

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income; output

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the consumer price index might NOT include

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fine china and antiques

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Factors affecting population growth include

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life expectancy and birthrate

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The ability of an economy to produce output is determined, in part, by

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the quantity and quality of the factors of production

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The census is required by

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the United States Constitution

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In the 1980s, the gap between high and low income families did NOT widen for

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the sharp increase in the cost of living

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The demand-pull theory places a responsibility for inflation on

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all sectors of the economy

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The immediate effect of inflation is the

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decline in purchasing power of the dollar

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The most popular explanation for the cause of inflation is

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excess monetary growth

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Employment figures understate the extent of employment because they include

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part-time jobs at minimum wage

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RIsing unemployment and inflation are forms of

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economic instability

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A comprehensive measure of consumer discomfort during a period of rising inflation and high unemployment is the

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misery index

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To reduce the money supply, the Fed might

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sell securities in the open market operations

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If there is an increase in aggregate supply with no corresponding increase in aggregate demand

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real GDP increases and the price level goes down

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What is the poverty threshold and how is it used by government?

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annual figure used to determine themoney income that families and individuals receive. If there income level falls below this, there are in poverty. The government uses this to decide the amount of money or benefits these people are eligible to recieve

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What is the role of government spending in Keynesian economics?

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the government is responsible for the health of the economy. Government should create jobs and employment programs during depressions and avoid deficit spending. When things are good, government should cut back on programs and work to keep the economy well balanced.