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12 Cards in this Set
- Front
- Back
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What is economic growth?
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An increase in the production of goods and services within a certain time period.
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What are the four cycles defined in the Business Cycle?
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Peak, recession, trough, and recovery.
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What is the unemployment rate formula?
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Unemployed divided by the number in Labor Force all times 100.
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What are the three types of unemployment? Explain them.
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1. Frictional unemployment- temporary, sometimes desirable.
2. Structual unemployment- longer time span, skills aren't marketable. 3. Cyclical unemployment- shifts in business cycle, length can vary. |
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What is Okun's Law?
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For every 1% point that the actual unemployment rate exceeds NRU, there will be negative GDP gap of 2%
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What is a GDP Gap?
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The difference between Actual GDP and Potential GDP.
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How do you calculate inflation rate?
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CPI of current year minus one of the previous year then divided by the previous year.
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How does inflation impact different population segments?
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Losers: fixed incomes, savers and creditors as purchasing power declines.
Unaffected: Social security income, debtors. |
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What is aggregate demand?
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The level of spending that occurs at every price level.
(Prices rise, spending falls) |
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What is aggregate supply?
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The level of real output produced by firms at every price level.
(firms produce more at higher prices) |
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What is expansionary fiscal policy?
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Seeks to improve economy through greater spending/lowering taxes.
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What is contrastionary fiscal policy?
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Seeks to restrain inflation by decreasing spending/raise taxes.
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