question
Real GDP
answer
GDP adjusted for inflation
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GDP
answer
the total market value of all final goods and services produced annually in an economy
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inflation rate
answer
the percentage increase in the price level from one year to the next.
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unemployment rate
answer
the percentage of the labor force that is unemployed
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Recessions
answer
periods of falling real incomes and rising unemployment
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Depressions
answer
Large fall of real GDP
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Deflation
answer
a decrease in the general level of prices
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endogenous variables
answer
variables that a model tries to explain
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Exogenous variables
answer
variables that a model takes as given
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Market Clearing
answer
When the prices of a good or service moves quickly back into equilibrium(not sticky).
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Income growth
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If income is keeping up with inflation
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Stock
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A quantity measured at a given point in time
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Flow
answer
A quantity measured per unit of time
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Nominal GDP
answer
The value of goods and services measured at market prices
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GDP deflator equation
answer
Nominal GDP/Real GDP x 100
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Nominal GDP equation
answer
Real GDP x GDP Deflator
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Real GDP formula
answer
Nominal GDP/GDP Deflator x 100
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GDP Deflator
answer
Measures the prices of output relative to its price in the base year.
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National Income Accounts Identity Components
answer
Consumption(C), investment(I), Government Purchases(G), Net Exports(NX), GDP(output) (Y)
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consumption
answer
spending by households on goods and services, with the exception of purchases of new housing
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investment
answer
Items bought for future use
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government purchases
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spending on goods and services by local, state, and federal governments
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net exports
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Trade with other countries
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GNP (Gross National Product)
answer
total dollar value of goods & services produced by a nation at home or away.
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GNP equation
answer
GDP + factor payments from abroad - factor payments to abroad
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NNP (net national product)
answer
GNP - depreciation
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CPI (Consumer Price Index)
answer
Turns the prices of many goods and services into a SINGLE index measuring the overall level of prices.
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Core Inflation
answer
measures the increase in price of a consumer basket that excludes food and energy products
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Laspeyres price index
answer
Consumer price index used to measure the change in the price of a basket of goods and services relative to a specified base period and weighting.
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PCEPI (Personal Consumption Expenditures Price Index)
answer
The ratio of nominal consumption spending to real consumer spending.
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Employed
answer
paid employees, self-employed, and unpaid workers in a family business
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Unemployed
answer
people not working who have looked for work during previous 4 weeks
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not in the labor force
answer
a person who is not looking for work because he or she does not want a job or has given up looking
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labor force
answer
the total number of workers, including both the employed and the unemployed.
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labor force participation rate formula
answer
labor force/adult population x 100
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unemployment rate equation
answer
number of unemployed/labor force x 100
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Employment rate equation
answer
employed/labor force x 100
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What is GDP?
answer
Product, total income(wages, rent, profit, interest), total expenditures(Y=C+I+G+NX), total value added. these numbers should all be the same they add up to the same thing.
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Components of CPI
answer
Housing(43%), Transportation(15%), Food(15%), Medical Care(9%), Recreation(6%)
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federal funds rate
answer
the interest rate at which banks make overnight loans to one another.
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