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AP Macro > AP Macro Unit 2 > Flashcards

AP Macro Unit 2 Flashcards

1
Q

Example:

Which of the following can be considered a leakage from the circular flow of money?

A

Savings

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2
Q

GDP Deflator (equation)

A

(nominal GDP/real GDP) x 100

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3
Q

In the measurement of GDP, investment includes spending by

A

businesses on capital goods and changes in inventory

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4
Q

BEST explains why transfer payments are not included in the calculation of GDP?

A

Recipients of transfer payments have not produced or supplied goods and services in exchange for these services.

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5
Q

true according to the circular flow model?

A

Households are demanders in the product market and suppliers in the resource market.

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6
Q

The circular flow of economic activity between consumer and producers includes which of the following?

A

Households sell resources to firms.
Households buy output from firms.

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7
Q

Pick the correct component of GDP-a new car

A

Consumption

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8
Q

Pick the correct component of GDP-a public school

A

Government spending

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9
Q

Pick the correct component of GDP-CIsco builds an office building

A

Investment

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10
Q

Pick the correct component of GDP-When I mow my lawn.

A

Not included

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11
Q

Pick the correct component of GDP-a new residential home

A

Investment

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12
Q

Pick the correct component of GDP-buying stocks

A

Not included

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13
Q

Pick the correct component of GDP-paying a stock broker to buy stock for you.

A

Consumption

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14
Q

Pick the correct component of GDP-soybeans grown in Iowa and sold to China

A

Net exports

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15
Q

What is the difference between real and nominal GDP?

A

real reflects price-level inflation, nominal does not

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16
Q

GDP= GROSS DOMESTIC PRODUCT Equation

A

GDP= Consumption + Investment + Government +Xn, exports

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17
Q

What is excluded from GDP?

A

Used goods
Intermediate goods
Purely financial transactions (such as stocks and bonds)
Transfer payments
Non-market production
Underground or black market activity

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18
Q

Actual rate of unemployment

A

(unemployed people/labor force) x100

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19
Q

Consumer Price Index (Definition)

A

Weighted market basket of goods and services purchases by households

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20
Q

Cost-Plus Inflation

A

Occurs when overall prices increase due to increases in the cost of wages and raw materials

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21
Q

Cyclical Unemployment

A

Overall unemployment that results from downturns in the business cycle

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22
Q

Demand-pull inflation

A

Results when prices rise because aggregate demand in economy is greater than aggregate supply

23
Q

Deflation

A

A sustained decrease in an economy’s overall price level

24
Q

Discouraged Workers

A

Someone who is no longer looking for a job

25
Q

Disinflation

A

A decrease in the inflation rate

26
Q

Employed

A

Persons 16 and older who are working, either part-time or full time

27
Q

Expenditures approach

A

Method of calculating GDP by summing amount spent on final goods and services within an economy during a particular year

28
Q

Exports

A

Something you make in your country and sell to another country

29
Q

Frictional Unemployment

A

Between jobs, just starting out

30
Q

Final Goods

A

Goods that are ready for final use by consumers/firms

31
Q

Gross Domestic Product (definition)

A

The market value of all final goods and services produced within a nation in a year

32
Q

Income Approach

A

Wages + Interest Payments + Rental Incomes + Profits = GDP

33
Q

Imports

A

Something you buy from another country

34
Q

Inflation

A

A sustained increase in an economy’s overall price level, reducing the purchasing power of money

35
Q

Intermediate Goods

A

You use these goods to produce something else (excluded from GDP)

36
Q

Investment

37
Q

Labor Force

A

employed + unemployed

38
Q

Natural Rate of Unemployment

A

Frictional + Structural unemployment

39
Q

Nominal

A

Not adjusted for price-level inflation. Real + Inflation

40
Q

Non-market Transactions

A

Not recorded, taxed, or monitored by the government

41
Q

Price Index

A

A measurement used to determine the price level and changes in the price level over time

42
Q

Real

A

Adjusted for price-level inflation

43
Q

Recessionary Gap

A

Real GDP is lower than the potential GDP at full employment level

44
Q

Stagflation

A

Economic cycle characterized by slow growth and a high unemployment rate accompanied by inflation

45
Q

Structural Unemployment

A

Job skills have become obsolete

46
Q

Unemployed

A

Jobless, but actively seeking work during 4 weeks

47
Q

Value-added approach

A

Adding up all value added at various stages of production

48
Q

Real GDP (equation)

A

(nominal GDP/GDP deflator) x 100

49
Q

GDP Growth Rate

A

[(real GDP period 2 - real GDP period 1)/ real GDP period 1] x 100

50
Q

CPI (equation)

A

(cost of base year market basket at current prices)/(cost of base year market basket at base year prices) x 100

51
Q

Consumer Inflation Rate (equation)

A

(CPI new- CPI old/CPI old)

52
Q

Real Interest Rate (equation)

53
Q

Unemployment Rate (equation)

A

(unemployed/labor force) x100

54
Q

Labor Force Participation Rate (equation)

A

(labor force/working age pop.) x100

AP Macro (1 decks)

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