ECON TEST 4/9/25 Flashcards
What is macroeconomics?
the study of the large economy as a whole
what is GDP?
it’s the dollar value of all final goods and services
what is GDP per capita
it’s the best measure of a nation’s standard living
what is not including in GDP?
goods inside the final goods don’t count.
difference between intermediate good and a final good?
A final good is one sold to the ultimate user (ex:clothing, televisions, food, and postal services)
Whereas an intermediate good is one that will be resold or incorporated into another good (ex: automobile engine, sugar, gold/any metals)
what is included in GDP?
Dollar value, final goods and one year
what is unemployment?
workers that are actively looking for a job but aren’t working
4 criteria for the labor force:
above 16 ys, able/willing to work, not institutional, not in the military
what are some characteristics of frictional unemployment?
temporary unemployment (being between jobs)
what is seasonal unemployment?
when people who work in seasonal jobs become unemployed when demand for labor decreases
what are some characteristics of cyclical unemployment?
a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP
characteristics of structural unemployment?
when workers experience unemployment for a long period of time as a result of structural changes in an economy and its labor force.
what is technological unemployment?
type of structural unemployment where automation and machinery replace workers
what natural of unemployment?
the amount of unemployment that exists when a economy is healthy (shows that we’re groiwing)
Full employment output?
Full-employment output refers to the level of production achieved when an economy operates at its full capacity
What are three problems with the unemployment rate?
- doesn’t count discouraged workers
- doesn’t count part -time workers
- understands race/age inequalities
what is inflation?
the rate of increase in prices over a given period of time
what is the Consumer price index?
a measure of how much the average cost of common goods and services.
What is The quantity theory?
a framework to understand price changes in relation to the supply of money in an economy. It argues that an increase in money supply creates inflation and vice versa.
What is Demand-Pull inflation?
Occurs when demand for goods and services exceeds supply in the economy
(Too many dollars chasing too few goods), Demand pulls up prices.
What is Cost-push inflation?
when prices increase due to increase in production costs
What is the business cycle?
Describes the natural ups and downs in a country’s economy.
what the two “trade-offs” of the business cycle?
Inflation & unemployment
a recession is a 6 month period of ______GDP?
recession = Decline
