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AP Econ > MACRO- unit one > Flashcards

MACRO- unit one Flashcards

0
Q

Discouraged worker

A

Employees who have left the labor force because they were unable to find employment

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1
Q

Fisher equation

A

.

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2
Q

Disposable income

A

Personal income-taxes (what you receive)

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3
Q

Durable goods

A

Hardest hit during a recession (goods that people do not buy during a recession)

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4
Q

Most economists believe that the immediate causes of business cycles are changes in the level of this

A

total spending

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5
Q

NBER national bureau of economic research

A

The group that gets to officially decide whether or not a recession has occured

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6
Q

BLS

A

Bureau of labor statistics

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7
Q

Frictional unemployment

A

Good unemployment

Two specific categories: search unemployment and wait unemployment

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8
Q

Consumer Price Index

A

Price of market basket of goods in current year/Base year price of basket of goods x100

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9
Q

Amount of official us recessions since 1950

A

10

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10
Q

Demand-pull inflation

A

“Too much spending chasing too few goods”
When the business cannot respond to excess demand in any way but raise the prices
*Economists argue about the affect of this

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11
Q

Cost-push inflation

A

Rising per unit costs reduce the amount of output firms are willing to produce which in turn raises the price
Main source is supply-shocks
*Reduces real output and redistributes a decreased level of income

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12
Q

Intermediate goods

A

products for further processing or resale

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13
Q

Final goods

A

products purchased by end users

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14
Q

Net domestic product

A

market value of GDP (consumption of fixed capital)

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15
Q

National income

A

income earned through use of american earned resources, includes taxes on production and imports

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16
Q

Personal income

A

all income (earned or not) by households

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17
Q

Disposable income

A

all income received minus taxes

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18
Q

Short comings of GDP

A
  • nonmarket activities (services of stay at home parents)
  • leisure
  • improved product quality
  • GDP does not measure well being
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19
Q

National accounting income enables economists to

A
  • assess economy health
  • track the long run course economy
  • formulate policies
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20
Q

When do prices fall during the business cycle?

A

Recession

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21
Q

Sticky prices

A

prices that are slow to change in the short run, they respond by changing employment and output but not by changing prices

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22
Q

Demand shocks

A

unexpected changes in demand

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23
Q

Supply shocks

A

unexpected changes in supply

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24
Rule of 70
.
25
The economy can only grow if
it invests and the economy can only invest if it saves some output
26
Economic investment
creation and expansion of business enterprises
27
Financial investment
What ordinary people refer to as investment, the purchase of assets such as stocks and bonds
28
Investment
resources devoted to increasing output (ie: producing capital)
29
Saving
Consumption
30
Macroeconomics studies
long run economic growth and short run economic fluctuations
31
What are the three things macroeconomics looks at?
1) Real GDP (value of goods and services produced) 2) Unemployment rate 3) Inflation
32
How do living standards rise?
When the economy grows faster than the population | *Key to raising living standards is saving and investment
33
What are the two ways to measure GDP?
Expenditures approach or the income approach
34
GDP consists of
new items and final goods
35
Expenditures approach
C+I+G+(X-M) Private Consumption=majority of GDP, it is whatever we buy Business Investment=anything a business buys to use for their service/good, any new construction (even if it is a private home), change in inventories Government Net exports (+exports-imports)
36
What does not count in GDP?
Stocks and transfer payments
37
Real GDP
adjusted for inflation
38
Personal income
Total amount of income received (earned or not earned)
39
Depreciation
Consumption of fixed capital an estimate of the amount of the amount of capital used up in producing the GDP
40
Labor force
At least 16 years old, not institutionalized, and looking for work
41
Unemployment rate
people who want work and are looking/total labor force
42
Is military in the labor force?
No
43
Cyclical unemployment
Desired skills but the economy is not doing well enough to hire
44
Structural unemployment
No desirable skills (because of technology)
45
Seasonal unemployment
Is not one of the three types but an example is a lifegaurd
46
Full employment
The same as natural rate of unemployment | Only frictional and structural unemployment, no cyclical
47
Inflation
<2% means price stability
48
Four phases of the business cycle
Peak, recession, trough, expansion
49
Peak
Business activity has reached a temporary maximum Near or at full employment Price level is likely to rise
50
Recession
Period of decline in total output, income and unemployment | Generally 6 months or more
51
Trough
Output and unemployment bottom out, can be short or long
52
Expansion
Real GDP, income and employment rise | Prices will rise and inflation will occur
53
National income
Total amount earned by american owned businesses
54
Net domestic product
How much we are better off
55
Net domestic product+depreciation
GDP
56
Okun's Law
Any rise of 1% above the full employment rate will lead to a 2% rise in the negative GDP gap
57
Who calculates the CPI?
BLS | Bureau of labor statistics
58
How to calculate inflation
% change in CPI or % change in GDP deflator current-previous/previous x100
59
GDP deflator
nominal GDP/real GDP x100 Uses ALL of what we produce
60
What are 5 shocks that can cause business cycles
- irregular innovation - productivity changes - monetary factors - political events - financial instability
61
What goods are most affected by business cycles?
Durable goods and capital goods because people can postpone buying these goods and make do with what they already have
62
Durable good
a good with a life longer than 3 years
63
Nondurable good
A good with a life less than 3 years
64
NRU
natural rate of unemployment | the point where the economy is producing its potential output
65
GDP gap
Actual GDP-potential GDP
66
In GDP the largest dollar amount is
consumer spending
67
The largest dollar amount of national income is
wages and salaries
68
What is leakage from the circular flow of economic activity?
saving
69
Income approach
Compensation of employees, rents, interest, proprietors' income, corporate profits, taxes on production and imports

AP Econ (15 decks)

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