GDP- Unemployment Flashcards
GDP
“national income”
Expenditures Approach
Add up all the spending on final goods and services produced in a given year
Income approach
Add up all the income earned from selling all final goods and services produced in a given year
Value-Add Approach
Add up $ value added @ each stage of production process
Labor Income
Wages earned from performing work
Rental Income
Income earned from property owned by individuals
Interest
Earned from loaning $ to business
Profit
After paying all costs
Consumer Spending
Part of expenditures
≈70% of U.S. GDP
Purchases of final good and services by individuals
durable goods, nondurable goods, and services
Business investment
Part of expenditures ≈16% of U.S. GDP Business spending on tools and equiptment Not stocks and bonds When businesses by capital New Real Estate
Government Spending
≈17% of U.S. GDP
Net exports
exports(x)- imports (m)
≈30%
Expeditors Equation
GDP=C+I+G+(X-M)
Inventories
Goods produced and held in storage in anticipation of later sales. Counted in year produced not sold
Why some GDP’s higher
Economic system, rule of law, capital stock, human capital, and natural resources
Not included in GDP
Intermediate goods, non-production transactions, non-market and illegal activities
Unemployed
Workers are actively looking for a job but aren’t working
Unemployment rate equation
of unemployed/#in labor forceX 100
Labor Force
Over 16 years old, able/willing to work, not institutionalized, not in military, not in school full-time or retired
Frictional unemployment
Temporary unemployment, between jobs. Qualified workers with transferable skills.
EX: Seasonal; time of year, nature of job
Structural unemployment
Changes in the labor force make some skills obsolete, non-transferable skills. Must learn new skills
EX: Technological; type of structural where automation and machinery replace workers
Cyclical Unemployment
Caused by a recession. “demand deficient unemployment”
Natural rate unemployment (NRU)
Frictional + Structural
Full employment output (y)
Real GDP when there’s not cyclical unemployment
