Unit 2 (Ch. 23-24, 28) Vocabulary Flashcards
This a shorter unit than the first one (which covered the basic concepts of economics in general), but albeit a very important one. We'll cover GDP and unemployment in this deck.
microeconomics
the study of how households and firms make decision and how they interact in markets
macroeconomics
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
gross domestic product (GDP)
the market value of all final goods and services produced within a country in a given period of time
consumption
spending by households on goods and services, with the exception of purchases of new housing
investment
spending on capital equipment, inventories, and structures, including household purchases of new housing
government purchases
spending on goods and services by local, state, and federal governments
net exports
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
nominal GDP
the production of goods and services valued at current prices
real GDP
the production of goods and services valued at constant prices
GDP deflator
a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
consumer price index (CPI)
a measure of the overall cost of the goods and services bought by a typical consumer
inflation rate
the percentage change in the price index from the preceding period
producer price index
a measure of the cost of a basket of goods and services bought by firms
indexation
the automatic correction of a dollar amount for the effects of inflation by law or contract
nominal interest rate
the interest rate as usually reported without a correction for the effects of inflation
real interest rate
the interest rate corrected for the effects of inflation
labor force
the total number of workers, including both the employed and the unemployed
unemployment rate
the percentage of the labor force that is unemployed
