Week 7 (Intro to Macro) Flashcards
What is at the foundation of macroeconomics?
Human Welfare
What is GDP?
Total Income and Total Expenditure
What is the GDP in its simplest form?
Market value of all goods and services produced within a country in a given period of time
What is the GDP function?
Y= C + I + G + Nx
What does the GDP function represent?
C = Private Consumption
I = Private Investment
G = Government Spending
Nx = Net Exports (Exports - Imports)
What does it mean if total spending rises?
The economy is producing a larger output or the goods and services are being sold at higher prices
What is Nominal GDP?
It is the GDP in current prices without adjustment for inflation
What is Real GDP?
It is the value of all goods and services produced while factoring in inflation
What is the formula for Real GDP?
Nominal GDP/Price Index x 100
What is Price Index?
Used as a value of money it is the measure of the money value of all domestically produced goods and services in a year
What is the GDP per capita?
GDP divided by Population
Can inflation ever be good?
It may help to indirectly adjust the wages and stabilise the labour market
What are the two categories of unemployment?
Natural Rate of Unemployment: The amount of unemployment that the economy normally experiences
Cyclical Unemployment: Year to year fluctuations in unemployment around its natural rate
What is the labour force?
Number of employed + Number of unemployed
What is the unemployment rate?
Number of unemployed/labour force x 100
