Unit 2: Flashcards
What is the Product Market?
Where goods and services are bought and sold
What is the Factor (Resource) Market?
Where resources, especially capital and labor, are sold
What is Gross Domestic Product (nominal)?
The total value of all final goods and services produced in the economy during a given year
What is Real GDP?
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year to remove the effect of price changes
What is Investment Spending?
Spending on new productive physical capital, such as machinery and structures, and on changes in inventories
What is Inventory?
The products that have been made, but not yet sold
What is the Consumer Price Index?
Measures the cost of the market basket of a typical urban American family
What are Government Transfer Payments?
Payments that the government makes to individuals without expecting a good or service in return
What is the GDP Deflator?
A price index that tracks the average prices of goods and services produced across all sectors of a nation’s economy over time
What is the Inflation Rate?
The percentage increase in the overall level of prices per year
What are Nominal Wages?
The rate of pay employees are compensated
What are Real Wages?
Calculated by adjusting nominal wages with the consumer price index or other measures of inflation to reflect true purchasing power
What is the Unemployment Rate?
The percentage of the labor force that is unemployed
What is the Labor Participation Rate?
The percentage of the total population that is in the labor force
What is Cyclical Unemployment?
The number of people out of work as a result of a temporary setback in the economy
What is Frictional Unemployment?
Unemployment due to the time workers spend in job search
What is Structural Unemployment?
Unemployment that results when workers lack the skills required for available jobs, or there are more people seeking jobs in a labor market than there are jobs available
What are Discouraged Workers?
Nonworking people who are capable of working but have given up looking for a job due to the state of the job market
What are Government Purchases (Expenditures)?
Expenditures on goods and services by federal, state, and local governments
