econ Flashcards
factor payment
how GDP is measured
land-rent
labor-wage
capital-interest
entrpreneurship-profit
per capita GDP
GDP/population
GDP
measured anything that is made in the country per year
recession
when GDP goes down for 6 months
intermediate goods
raw materials needed to make something. doesn’t count as GDp bc double counting
excluded from GDP
foreign stuff any work you do for yourself barter housework cash transfer payment-money from gov stock/bonds used crime/pollution
income method way of computing GDP
wages+
interest+
rent+
profit
expenditure method way of computing GDP
Consumer spending+
investment-business spending+
gov spending(most volitole)+
net export
*includes housing
unplanned investment
made but not sold at the end of the year, in GDP but is bad
business cycle
expansion/recovery
peak-inflation
contraction/recession
trough/depression
demandpull inflation
60
consumer buy product faster than it can be produced, price rises
peak of business cycle
fiscal policy
uses taxes n gov spending to alter economy
monetary policy
uses supply of money to change interest rates, by federal reserve
gdp-depreciation
net domestic product
depreciation: new thing that replaces old
personal income-personal taxes
disposable income
disposable income-expenses
discretionary income
frictional unemploy
btw transtion in life
cyclical unemploy
during contraction of business ccle, slowdown, laidoff
structural unemploy
skills obselete
technical unemploy
job replaced by machine
discouraged worker-not counted as unemployed
unemployed stop looking
or
unemployed for 2 years
unemployment rate
unemployed/
labor force
labor force
unemployed+employed+looking
good percentage
unemploy 4-6
GDP 3
inflation 2
labor force participation rate
labor force/
population
misery index
inflation+unemployment
cost-push inflation 70
cost of production increases
prices increases
high unemployment
hyperinflation
> _ 50 percent inflation
overprinting money
qunatity theory of money
increase money supply leads to increase in price level
menu cost
how inflationcreates distortions in the econ n impact ppl
business spends time, effort and money to change prices
shoe leather cost
consumers running around and buying things before prices go up
impacted most by inflation
consumers-prices rising faster than income
fixed income-retired sss
savers
banks with fixed rate loans-paying back during flation with less valuable money
winners of inflation
investors in gold/real estate
gov in debt
paying back loans on fixed dollar contract
leading indicators of future econ
changes in 6-9 months
- avg work week, decreases=unemployed
- building permits, increases=unemployed
- stock market, increases=good
- inventory
3 measures of inclation
consumer price index-CPI (popular)
GDP deflator
producer price index
CPI
uses fixed weighted market basket of goods/services that consumer purchase regularly
most heavily weighed=housing/mortage
changes from year to year is infaltion rate
weakness in CPI
subsitution bias
uses only retail prices
quality changes, increase in quality, increases price
intro of new products
GDP deflator percentage
measures good.services actually produced based on GDP
nominal GDP/real GDP = inflation rate
similar to CPI
Producer price index
measures good purchases by business. increases=foreshadows increases in toher measures of inflation. raw materials included
classical economy theorest
economy is flexible, will go back to ful employ, gov stays out of it
keynesian
econ is rigid, needs intervention
why Aggregate demand curve slopes down
real balnces wealh effect
interest rate effect
foreign purchases effect
why AD curve shift
stock market boom
increase consumer spending-increases AD
changes in CIGX
