ECON Chapters 6, 7, 8 Study Guide

c. Subtracted from; added to

B. The sale of a song written by a Californian to a customer in Kansas

C. Peak, contraction, torugh, expansion

A. GDP is the output produced by workers and resources owned by residents of a nation.

A. an economic contraction

A. The unemployment rate

B. Real GDP decreased over the ten years

D. Transfer Payments

C. Why the price of lemonade decreased?

A. Final godds and services produced annually within a country's borders

B. Purchase of Shares in Walmar -Finance versus industrial advantage -Look for investments that aren't soley financial

A. $60.0 billion

C. Investment Spending

A. Microsoft is considering buying another firm to help it expand its social media presence

A. Consumer Spending

C. Clothes sold by my family on e-bay

C. Measuring inflation -It already takes inflation into account -It doesn't measure inflation because of it

The Market Value of all final goods and services produced within a country during a specific period

GDP per person

The growth in the overall level of prices in an economy

GDP adjusted for changes in prices

Measured as the percentage change in real per capita GDP

Short-term economic downturn

The U.S. recession lasting from Dec. 2007 to June 2009

A short-run fluctuation in economic activity

A phase of the business cycle during which economic activity is increasing

A phase of the business cycle during which economic activity is decreasing

Outputs that provide benefits without producing a tangible product

Goods that firms repackage or bundle with other goods for sale at a later stage

Goods sold to final users

Output produced by workers and resources owned by residents of the nation

Purchase of final goods and services by households, excluding new housing

Private spending on tools, plant, and equipment used to produce future output

Includes spending by all levels of government on final goods and services

Net exports (NX) = exports - imports

GDP measured in current prices and not adjusted for inflation Inflation is NOT taken into account

Measure of the price level that is used to calculate real GDP

GDP data does not include the production of nonmarket goods, the underground economy, production effects on the environment, or the value placed on leisure time. 1. Nonmarket Goods: -Goods and services that are produced, but not sold: like washing dishes, mowing lawns, washing cars, etc. 2. Underground Economy -Unreported transactions that are, therefore, untaxed. Usually settled in cash. Usually illegal goods and services. -Unreported legal goods and services include: tips or waiting tables, tending bar, lawn services, home renovations, etc. 3. Quality of the Environment -Environmental effects: water and air pollution, etc. 4. Leisure Time -Countries have different averages of work hours: U.S. with 36 hrs. per week VS. Sweden with 31 hrs. per week

1. Measuring living standards Living conditions are either good or bad 2. Measuring economic growth Changes in living standards over time 3. Measuring business cycles Expansions and contractions

Gross Domestic Product = Consumption + Investment + Government purchases + Net Exports (+ Exports; - Imports)

Real GDP= (Nominal GDP/ Price Level) x 100

General increase in the price level---measure as the average price level growth rate vs. A fall in the price level

-Uncertainty about price changes -Long-term wages and contracts difficult

A measure of the price level based on the consumption patterns of a typical consumer

CPI needs to be accurate. When employers adjust wages for inflation, they generally use the CPI.

His or her wage expressed in current dollars vs. nominal wage adjusted for changes in the price level.

Price Index = (Basket Price / Basket price in base year) x 100

Inflation Rate (i) = ((P2-P1)/P1) x 100

Price in Today's dollars = Price in earlier time x (Price level today / Price level in earlier time)

Occurs when a worker who is not currently employed is searching for a job without success

Percentage of the labor force that is unemployed

Unemployment caused by changes in the industrial makeup (structure) of the economy

Unemployment caused by delays in matching available jobs and workers

Unemployment caused by economic downturns

AKA Federal jobless benefits, is a government program that reduces the hardship of joblessness by guaranteeing that unemployed workers receive a percentage of their former income while unemployed

The typical unemployment rate that occurs when the economy is growing naturally

Potential output or potential GDP, is the output level produced in an economy when the unemployment rate is equal to the natural rate

Percentage of the work-eligible population that is in the labor force

Labor force participation rate = (Labor force/ work-eligible population) X 100

Those who are not working, have looked for a job in the past 12 months and are willing to work, but have not sought employment in the past 4 weeks

Those who have part-time jobs but who would prefer to work full-time

Unemployment Rate = U = (Number unemployed/ labor force) x 100