GDP Test Flashcards
Durable Good
- Can be used repeatedly
Non-Durable Goods
Gets used up
Capital Deepening
Firms increase physical capital by purchasing more equipment. Firms and employees increase human capital through additional training and education
Real GDP
Accounts for inflation
Nominate GDP
Counting GDP
Intermediate Good
“Ingredients”
- Do not count towards GDP
Final Good
Any good or service that is sold and consumed as is
Four phases of GDP
1) Expansion: GDP increases over time
2) Peak: GDP stops increasing
3) Contraction: GDP decreases over time
4) Trough: GDP stops decreasing
Consumer Price Index
Tracks changes in the price of the market basket
Market Basket
Representative sample of goods and services
Full Employment
No cyclical unemployment (there are enough jobs)
- unemployment rate is 2-4%
Four types of unemployment
1) Frictional Unemployment: qualified, jobs exist, but workers haven’t found them yet
2) Seasonal Unemployment
3) Structural Unemployment: Skills of the unemployed don’t match job openings
4) Cyclical Unemployment: Caused by a contraction
Inflation
A general increase in price level
Decrease in purchasing power
Gross Domestic Product (GDP)
The dollar value of all final goods and services produced in a country’s borders in a given year
Leading Indicators
Economic variables used to predict changes in the business cycle
Lagging Indicators
Change after GDP unemployment
Unemployment Rate
Percentage of the labor force that is unemployed
Underemployed
Part of the labor force, but no job
Recession
GDP decreases for 6 months
Depression
Especially long or severe recession
Purchasing power
Value of a currency expressed in terms of the amount of goods or services that one unit of money can buy
Aggregate Supply
Supply of all goods and services in an economy
Aggregate Demand
Demand for all goods and services in an economy
Poverty Threshold
Minimum income to support your family
