Extras Flashcards
What is crowding out?
Crowding out refers to when government must finance its spending with taxes and/or with deficit spending, leaving businesses with less money and effectively “crowding them out.”
What is the poverty trap?
Where people on very low incomes will increase their working hours to get a little more money, yet are still in poverty.
What is the unemployment trap?
Where you may cut benefits to encourage people to work but, because they are so little better off, they choose to remain unemployed.
What is Nominal GDP?
Nominal GDP is GDP evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.
What is Real GDP?
Real GDP is GDP evaluated at the market prices of some base year. For example, if 1990 were chosen as the base year, then real GDP for 1995 is calculated by taking the quantities of all goods and services purchased in 1995 and multiplying them by their 1990 prices.
