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Ethics in Business and Industry > Macroeconomics > Flashcards

Macroeconomics Flashcards

1
Q

GDP

A

Gross Domestic Product

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2
Q

What is GDP?

A

measure of all final goods and services produced in a specific time period by a country

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3
Q

GDP includes:

A

consumptions, investment, government purchases and net exports

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4
Q

GDP does not include:

A

financial transactions (stocks and bonds), transfer payments from private/public, second-hand sales, values of work done outside the market

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5
Q

final goods

A

final product ready for sale

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6
Q

intermediate goods

A

used to produce final goods

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7
Q

How to calculate GDP:

A

consumption + investment + government purchases + net exports

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8
Q

Investments when calculating GDP include:

A

purchase of new capital goods (business equipment, new commercial real estate, residential housing and inventories

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9
Q

What is disposable personal income?

A

after-tax income

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10
Q

Disposable personal income is important because:

A

it shows us how consumers save, spend and borrow

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11
Q

What is economic growth?

A

the increase in good/services produced over a time period

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12
Q

How does economic growth look on a graph?

A

upward slope

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13
Q

What causes economic growth?

A

growth in the size of the work force and growth in productivity of the work force

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14
Q

What is real GDP per capita?

A

it measures the total economic output of a country divided by the number of people and adjusted for inflation

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15
Q

How to calculate real GDP per capita:

A

GDP of country/population

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16
Q

Growth Rate:

A

New-Old/Old x 100

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17
Q

Rule of 70:

A

the number of years it takes for a country’s economy to double in size to equal to 70 divided by the growth rate in percent ex: growth rate 1% –> 70/1= 70 “how many years would it take?”

18
Q

What are business cycles?

A

intervals of expansion and recession in economic activity

19
Q

Four Phases of the business cycle:

A

Peak (max econ. activity), Recession (contraction), Trough (bottoms out), Recovery/Expansion (increasing output (GDP)/Employment

20
Q

How do business cycles affect GDP?

A

GDP falls during a recession; direct relationship

21
Q

Who decides when there is a recession?

A

National Bureau of Economic Research, board of 7 economists

22
Q

Facts about the Great Recession

A

Began Dec. 2007 and ended June 2009, the longest recession (18 months) and most severe since the Great Depression

23
Q

How to calculate unemployment:

A

of unemployed/labor force x 100

24
Q

Three types of unemployment:

A

structural (change in tech/industry), cyclical (result of recession), and frictional (temporary)

25
Q

Labor Force Participation Rate:

A

labor force/working-age population x 100

26
Q

“discouraged workers”

A

those who were unemployed and stopped looking for another job; are not counted

27
Q

“unemployed”

A

without a job but actively looking for one

28
Q

Full employment

A

those with a job, including part-time workers and underemployed workers (all included in U6 rate)

29
Q

“natural rate”

A

full employment

30
Q

What is inflation?

A

an increase in prices of goods/services during a period of time

31
Q

CPI

A

consumer price index; calculates inflation/deflation; inflation is the percent change in CPI

32
Q

How to calculate CPI

A

(# in current year/# in base year) x 100 (base year=100)

33
Q

Adjust for inflation

A

current CPI/earlier CPI x 100

34
Q

Who is impacted by inflation?

A

fixed-income receivers, savers, creditors

35
Q

Who is not impacted by inflation?

A

flexible income receivers, debtors

36
Q

Shoe-leather costs

A

time spent trying to spend money before it loses value

37
Q

Money Illusion

A

think nominal prices are real

38
Q

Menu costs

A

costs you have to incur when you change prices

39
Q

Nominal Values

A

the current price and does not adjust for inflation

40
Q

Real Values

A
41
Q

How to calculate real values out of nominal values:

A

Ethics in Business and Industry (3 decks)

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