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51 Cards in this Set
- Front
- Back
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full employment |
everyone who wants a job has one |
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cyclical unemployment |
market for labor is temporarily low ; affected by downturns in the economy;if econ grows again, demand for labor will increase |
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seasonal unemployment |
demand for employees varies depending on time of year (don't need holiday workers in summer & hard to find lifeguard job in winter |
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structural unemployment |
structural boundaries prevent employees & employers coming together ( a lot of workers in Florida, but Google needs workers in California); could also be a lot of eligible workers, but they don't have the education required for the job |
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transition unemployment |
employee/employer desires to make a change (employee leaves job for a job that pays more) |
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capacity |
resources an econ processes, or its ability to acquire those resources |
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productivity |
uses of resources to create income |
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factors of production |
labor natural resources money (financial capital) knowledge |
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prices |
increase with inflation decrease with deflation |
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demand-pull inflation |
demand>supply |
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cost-push inflation |
cost increases without increase in demand (US when supply suddenly limited) (ice in hurricane example) |
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nominal income |
income of individuals, businesses, and nations in current year money; don't adjust for changing prices because of inflation or deflation |
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real income |
adjust nominal income for inflation or deflation |
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economic index |
measures relative change of an economy factor over time (you paid $1 for Target product last yr that now costs $1.25) -CPI -PPI -GDP deflator |
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Customer Price Index |
average price consumer goods have changed (measured by looking at food, medical services and housing prices) |
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Producer Price Index |
measures how prices of products sold have changed in a given period (price= wholesale prices) (measured looking at prices of minerals, labor, & energy) |
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GDP deflator |
prices of all items have changed in given period |
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Adam Smith |
econ is not a zero-sum game; econ can be win-win
-economy is best if people are free to own property; competition INVISIBLE HAND= competition makes economy better |
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multiplier effect |
when spend money you create income for someone who then spends their money and creates income for you (win-win) |
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supply/demand |
surplus, shortage, market equilibrium |
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price elastic |
when supply/ demand react to price change |
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price inelastic |
when supply and demand don't react to price change (gas) |
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monopoly |
utility industry |
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oligopoly |
few businesses control supply (gas) |
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collusion |
when oligopolies get together and set prices |
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socialism |
government owns selected business (Venezuela) |
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nationalized |
what you call a business that is owned by the govt |
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communism |
Marx; NO private ownership, govt owns everything |
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controlled/regulated economy |
privately owned; heavily regulated by government (govt tells business what they can and cannot do) |
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mixed economy |
United States |
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nominal GDP |
current price |
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real GDP |
nominal GDP + one adjustment (GDP deflator) (adjusted for price changes-eliminates impact of price changes to focus on goods/services produced |
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sources of GDP |
consumption investment (spend $ on capital items-buildings/equipment) govt spending (national defense, roads, etc) exports =C+I+G+E |
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consumption |
individuals buy products manufactured in home country in US 70% of GDP is consumption |
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durable vs nondurable goods |
durable=long life nondurable=short lives (food,clothing) |
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uses of GDP |
consumption savings taxes imports =C+S+T+Imp |
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disposable income |
take home pay; $to spend on other thinfgs |
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marginal propensity to consume |
tendency to spend disposable income ` |
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marginal propensity to save |
tendency to save disposable income |
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net GDP |
GDP=C+I+G+NE NE=Exports-imports |
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recession |
2 consecutive quarters of negative growth in real GDP |
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depression |
long, severe recession |
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fiscal policy |
government spending/taxation -govt spending increases, jobs &income increase -cut taxes, increased disposable income |
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monetary policy |
govt management of supply of money velocity=how many times money is used |
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GDP= |
money supply x velocity |
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federal reserve |
1)print/circulate money 2)decide how much money a bank can lend/hold in reserve 3)influence interest rates |
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deficit |
govt spending>tax revenue |
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leading economic indicators |
-consumer sentiment (how consumer feel about the future) -claims for unemployment benefits -housing starts -inventories -interest rates -price of products |
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US unemployment rate |
4.9% |
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do we want 100% employment |
NO! =overemployment -need competition of workers -cant fill jobs or fire inefficient employees |
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US inflation? |
low |
