Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
29 Cards in this Set
- Front
- Back
Explain why prices are used rather than quantities, in national income accounting. |
Prices measure output, you want to compare the period of time |
|
GDP vs GNP |
GNP= we own, GDP= our factors, our borders |
|
Identify examples of and non-examples of things included in GDP |
Non market value- stay at home mom Under the table- babysitting Intermediate- wheat that goes to farmer that goes to village bagel |
|
Intermediate vs Final goods in GDP |
GDP excludes intermediate |
|
How is the real interest rate calculated? |
nominal=real+inflation rate |
|
Depreciation |
wearing out of old plants and equipment |
|
Relate Net Domestic Product to country's potential for long-term growth |
NDP is best measure of future growth |
|
The role of inflation in creating two separate line |
nominal is above real, inflation causes value of money to fall |
|
The GDP deflator's base year |
where nominal GDP and real GDP meet |
|
INvestment |
business spending on plant, equipment, changes in inventory |
|
2 uses of household disposable income |
save or spend |
|
Explain the equivalency between total output and total income in an economy |
spending=income, income=new production, cir circular flow |
|
Labor force |
people over 16 working for pay of actively looking |
|
Unemployment |
inability of labor force participant |
|
How does labor force growth impact economic outcomes? |
can increase a country's PPC |
|
Explain the major macro consequence of unemployment for an economy |
lost output |
|
Describe how unemployment is impacted during period of economic growth or reason (duration, costs, rate, underemployment) |
more cyclical in recessions, less growth |
|
Inflation & Deflation |
Inflation: average prices rise, relative uncertain Deflation: prices falling |
|
Explain income effects as a redistributive effect of inflation |
Have a redistributive effect among people via inflation |
|
Apply income and price effects to an inflationary context. What is their impact on real income? |
Nominal income is constant, but real income is falling |
|
Money Illusion |
Use of nominal dollars rather than real dollars to gauge income or wealth |
|
Given a population and its labor force, calculate unemployment rate |
amount unemployed/total labor force |
|
Macroeconomic effects of inflation |
Bracket creep, uncertainty, speculation |
|
Describe how the Bureau of Labor Statistics constructs the CPI |
what people buy and how prices of those items change over time |
|
Characterize the GDP deflator |
All goods and services produced, both price changes and market responses, usually less than CPI |
|
Cost-push |
supply curve contracting, increase in production costs |
|
demand-pull |
too many consumers chasing too few goods |
|
role of COLA |
adjust nominal income to rate of inflation |
|
Relationship between wages and prices over the course of recent US history |
direct relationship with wages rising first and more prices following
|