Finals Flashcards
deals with the aggregate economy.
Macroeconomics
It analyzes the total of how everyone in the economy bought and sold,
earned and spent, produced and sold, conceptualized and
implemented projects, trained and worked, and saved and invest.
Macroeconomics
It cannot be felt directly. They can only be observed if one is in the
direct path of economic change.
Macroeconomics
Means that the economic standing of a country is expanding from the previous period.
Growth
Reflects the capacity of the population, to afford the various products and services in the economy.
Prices
Matches that economic growth by providing people with jobs that will allow them to satisfy their needs, and wants through the income that they will receive.
Employment
it is the value of the goods or services produced by the country in a specified period of time.
Gross Domestic Product
an economy doing poorly means that it is earning less than the past values as measured by the GDP.
Measuring of income and spending
GDP may be used to identify the total income and total spending of the whole economy.
Measuring of income and spending
It is the summation of all the final goods and services produced within a country for a specific period.
Gross domestic product
Summation of all the final goods and services means all the market value of products sold and services rendered within a specific period.
Gross domestic product
indicates completeness, so wages spent by households for services rendered like labor are included.
Summation
mean that the value of a product as raw material and as an intermediate are not measured because this will double-count the value of the goods.
Final goods
means goods that are currently made and sold at that particular period in a specific year.
Produced
occurs when households spend their income to buy goods and services.
Consumption
Are classified into durable goods – goods that do not deplete with use like gadgets and non-durable goods – are products that decrease when uses like food.
Goods
are those goods that one gets or consumes without physically holding on to them, like getting a massage.
Services
refers to goods that one buys for future use like machinery and equipment, which are utilized to produce other goods and services.
Investment
specify the value of the spending transactions of the state after collecting taxes from the households and firms.
Government expenditure
refers to the difference between imports and exports.
Net exports
purchases made by foreign entities from domestic producers
Exports
have a negative value because these are considered foreign spending.
Imports
a period of relative normality in an economy. It means that the economy did not encounter any serious social, political, economic, and environmental problems.
Base year
mimics the growth of the GDP without the prices.
GDP Deflator
is the measure of all the final goods produced by the labor of a country in a specific period, including earnings from abroad.
Gross National Product
measures the economy’s overall performance
National income
are goods and services that are purchased for resale or further processing or manufacturing.
Intermediate goods
Of goods would destroy the value of GDP.
Multiple counting
is the market value of the firm’s output less than the cost of the inputs the firm has bought from others.
Value added
are the social security payments, welfare payments that the government makes directly to households. Since the recipients contribute nothing to current production in return, to include in GDP would be to overstate the year’s output.
Public transfer payments
such payments include the money that parents give to children of the cash gift. They produce no output. They transfer funds from one private individual to another and do not enter into GDP.
Private transfer payments
the buying and selling of stocks and bonds is just a matter of swapping bits of paper. It creates nothing in the way of current production and is not included in the GDP.
Stock market transactions
contribute nothing to current production and, for that reason, are excluded from GDP.
Secondhand sales
to determine GDP using the expenditure approach, and we add up all the spending on final goods and services that have taken place throughout the year.
Expenditures approach
by far the largest share of national income, was paid as wages and salaries by business and government to their employees. This also includes wage and salary supplements (social insurance, private pension, health, and welfare funds for workers)
Compensation of employees
Consists of the income received by the households and businesses that supply property resources. This also includes the monthly payments of tenants and lease payment of corporations for the use of office space.
Rent
consists of the money paid by private businesses to the suppliers of money capital.
Interest
which consists of the net income of sole proprietorship, partnership, and unincorporated businesses
Proprietor’s income
taxes are levied on the corporation’s net earnings and flow to the government.
Corporate income
these are the part of corporate profits that are paid to the corporate stockholders and thus flow to households – the ultimate owners of all corporations
Dividents
are monies saved by the corporations to be invested later in new plants and equipment. They are also called retained earnings.
Undistributed corporate profits
National income accountants add a statistical difference to national income to make the income approach match the outcome of the expenditures approach.
Statistical discrepancy
to determine is to subtract from GDP the capital consumed in producing the GDP, which had to be replaced. That is, remove the consumption of fixed capital (depreciation) from GDP.
Net Domestic Product
includes all income earned through the use of the country’s resources, whether they are located at home or abroad.
National income
includes all income received, whether earned or unearned. -transfer payments must be added to personal income like:
Personal income
is personal income, less personal taxes.
the amount of income that households have leftover after paying their taxes.
- They are free to divide that income between consumption and savings.
Disposable income
This refers to the fluctuations in the economy.
- It is the recurrent ups and downs in economic activity, which extend over several
years.
Business cycle
forces outside the economic system create the business cycle.
Exogenous theory
forces within the economic system cause the fluctuation of the economy.
Endogenous theory
the economy’s levels of output and employment expand toward full employment.
Recovery/Expansion
As the name suggests, this is the highest point of all business cycles.
Peak/Boom/Prosperity
a period of decline in total output, income, employment, and trade.
Recession/contraction
It is a severe form of recession. In this phase, we will see a negative growth rate in the economy. There is a continuous decrease in demand.
Depression/ Trough
Those firms which had produced in abundance during the expansion phase face the problem of maintaining unsold items.
Excess inventory
To reduce investment, the recession phase is marked by a large scale of retrenchment.
Unemployment
Large investments, increase in employment, income, and expenditure.
High growth
An increase in investment forces more money supply in the system. Demand for factor inputs increases, hence their prices increase, which increases the cost of production. So the wages and prices of goods also increase.
Inflation
Firms resort to a large amount of nonproductive expenditure on advertisements and publicity.
Severe competition
This means there is no available job for every person who is willing and able to work.
Unemployment
A situation is when individuals are working, but they do not contribute to production.
Disguised unemployment
This category includes those who worked as paid employees, used in
their own business, or worked as unpaid workers in a family member’s business. Both full-time and part-time workers are counted.
Employed
This category includes those who were not employed, were available for work and had tried to find employment during the previous four weeks. It also consists of those waiting to be recalled to a job they had been laid off.
Unemployed
This category includes those who fit neither of the first two categories, such as full-time students, homemakers, and retirees.
Not in the labor force
it is often thought to explain relatively short spells of unemployment. - caused by interruptions in production due to technical reasons.
- workers are laid off due to renovation.
- workers left their job and are looking for a new one.
Frictional unemployment
This occurs when the quantity of labor supplied exceeds the quantity demanded.
- it is often thought to explain longer spells of unemployment.
- this kind of unemployment results when wages are set above the level
that brings supply and demand into equilibrium. - caused by a change in technology.
Structural unemployment
caused by the fall of business in the economy.
Cyclical unemployment
during the slack period, workers are laid off.
Seasonal unemployment
as the sum of the employed and the unemployed
Labor force
as the percentage of the labor force that is unemployed; Unemployment rates can be computed for the entire adult population and specific groups defined by race, gender, and so on.
Unemployment rate
Measures the percentage that adult population that is the labor force that
Labor-force participation rate
This refers to the rising general level of prices.
Inflation
- occurs when demand for goods and services exceeds supply.
- another cause is the excess money supply without an increase in
production.
Demand-pull inflation
this is caused by an increase in the cost of production and profit push versions
Cost-push inflation
occurs when supply cannot meet the demand.
Structural Inflation
This term is reserved for extremely rapid inflation, whose ultimate impact domestic output in employment can be devastating.
Hyperinflation
his term is reserved for extremely rapid inflation whose ultimate impact on domestic output and employment can be devastating.
Stagflation
When the government raises revenue by printing money, it is said to levy an inflation tax.
- The inflation tax is not exactly like other taxes, however, because no one receives a bill from the government for this tax. Instead, the inflation tax is subtler.
- The inflation tax is like a tax on everyone who holds money.
Inflation tax
inflation penalized people who received relatively fixed nominal income.
Fixed nominal income receivers
as price rises, the real value or purchasing power of savings will
deteriorate.
Savers
unanticipated inflation benefits debtors (borrowers) at the expense of creditors (lenders)
Debtors and creditors
