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CT Economics Hill > Economic Performance Test > Flashcards

Economic Performance Test Flashcards

1
Q

Define Business Cycle

A

Series of growing and shrinking periods of economic activity
-measured in increases or decreases in real GDP

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2
Q

Define Consumer Price Index

A

Measure of changes in the prices of goods and services commonly purchased by consumers

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3
Q

Define Durable Good

A

Good that does not wear out or go away quickly

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4
Q

Define GDP

A

The market value of all final goods and services produced in a nation in a given time period.

  • Must be final
  • Produced in given time period
  • Produced within a nation’s borders
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5
Q

Define inflation

A

A sustained rise in the level of prices and a sustained fall in the purchasing power of money

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6
Q

Define net Exports

A

Goods and services produced in the nation but sold in foreign nations, minus value of imports.

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7
Q

Define Non-Durable goods

A

Goes away quickly; perishable

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8
Q

Define Productivity

A

Amount of output produced from a set amount of inputs

  • Refers to the quantity of goods and services a worker can produce for each hour of work
  • Increases when the same amount of inputs produce more output
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9
Q

Define Real GDP

A

GDP corrected for changes in prices from year to year

  • Estimate of GDP if prices remained constant
  • More accurate measure of economic performance
  • Good indicator of how well a Country’s resources are being utilized
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10
Q

Define REal GDP Per Capita

A

Real GDP divided by population

-reflects each person’s share of real GDP

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11
Q

Define Underemployment

A
  • Part time workers who want full time jobs
  • people working below their skill levels
  • laid off workers who are temporary, lower paying jobs
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12
Q

Define Unemployment Rate

A

Percentage of the labor force that is jobless and looking for work

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13
Q

How is economic growth measured?

A

percentage changes in GDP

-Dependent upon quality/quantity of resources

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14
Q

What does GDP measure?

A

The market value of all final goods and services produced in a nation in a given time

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15
Q

What are the four components of GDP?

A
  • Consumption
  • Investments
  • Government Spending
  • Net Exports
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16
Q

How do you calculate GDP?

A

Consumption+Investments+Government spending+Net Exports=GDP

17
Q

What items are not included in GDP?

A

Personal Investments

18
Q

What are the requirements of GDP?

A
  • Has to be final product or service
  • Must be produced in a given time period
  • Must be produced within a nation’s borders
19
Q

What is the usual measure of a nation’s standard of living?

A

Real GDP per capita, not quality of life

20
Q

How does productivity increase?

A

When the same amount of inputs produce more output

21
Q

What are the effects of inflation?

A
  • Decreases value of dollar bill
  • Increases interest rates
  • Decreases real return on savings
22
Q

How is the labor force for each nation calculated?

A

Adding the number of people over 16 who are employed or actively looking for work

23
Q

How is the unemployment rate calculated?

A

The percentage of the labor force that is jobless and looking for work

24
Q

What are the 4 types of unemployment?

A
  • Frictional
  • Seasonal
  • Structural
  • Cyclical
25
Q

What are the four parts of the business cycle?

A
  • Expansion
  • Peak
  • Contraction
  • Trough
26
Q

What is the difference between a depression and a recession?

A

A depression is an extended period of high unemployment and reduced business activity
A recession is a contraction lasting two or more quarters

27
Q

What is the lowest point of the business cycle?

A

The trough

28
Q

What is the highest point of the business cycle?

A

the peak

29
Q

Describe Frictional unemployment

A
  • Temporary unemployment because one is changing jobs

- Reflects worker’s freedom to find work that best suits them at the highest wage possible

30
Q

Describe Seasonal unemployment

A

Linked to the changing of seasons
-Ex:
Construction, migrant and farm jobs, tourism

31
Q

Describe Structural unemployment

A

Situation in which the job exists, but no one can fill it

Possible causes: New technology replaces workers, new industries require specialized education

32
Q

Describe Cyclical unemployment

A

Caused by part of the business cycle with decreased economic activity
-follows business cycle, typically in contraction phase

33
Q

Explain expansion of the business cycle

A

a period of economic growth or increase in a nation’s real GDP over time

  • Low unemployment
  • More resources and higher prices
34
Q

Explain peak of the business cycle

A

GDP is at its highest

  • Resources are tightened due to rising prices
  • Businesses lose some profits and cut production
35
Q

Explain contraction of the business cycle

A

Economic slowdown or decline

  • Producers cut back
  • Resources become scarce
  • Prices stabilize
36
Q

Explain trough of the business cycle

A

The point at which GDP and unemplyment stop declining

-Cycle complete

CT Economics Hill (10 decks)

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