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1st Exam Set: ECON1403AN, Macroeconomics CH.1-5
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Study for the first exam in Bernard Prosper's Macroeconomics course (Seton Hall University).
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Economics
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the study of how people seek to satisfy their needs and wants by making choices, using incentives, to cope with scarcity.
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GDP
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Gross Domestic Product- the total market value of all final goods and services, produced within a year, within a country's economy.
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CPI (Consumer Price Index)
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a measure of the overall cost of the goods and services bought by a typical consumer, usually compared against that of a given base year. (price of current basket / price of basket in base year) x 100 = CPI.
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% Change in Prices using CPI:
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current year index - base year index = % change in prices. (example: if the base year index is 100 and the current year index is 130, 130-100=30, so the % change in prices would be 30%.)
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CPI Inflation Rate Equation
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(CPI Year 2 - CPI Year 1)/ (CPI Year 1) x 100.
This is normally used to calculate the CPI Inflation Rate for years without a base year. Year 2 = given year, Year 1 = previous year.
This is normally used to calculate the CPI Inflation Rate for years without a base year. Year 2 = given year, Year 1 = previous year.
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Labor Force
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the total number of workers in a population, including both the employed and the unemployed. (full-time, part-time, between jobs, jobless but seeking, etc.)
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Employed Worker
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working for wages, self employed , unpaid in the family business, part-time or temporary employee.
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Unemployed Worker
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a worker who currently is not employed and is actively seeking employment or has been actively searching for the last 4 weeks.
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Marginally Attached Worker
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a person who currently is neither working nor looking for work but has indicated that he or she wants and is available for a job and has looked for work sometime in the recent past.
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GDP Income Approach
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W + I + R + P (wages + interest payments + rent + profits)
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GDP Expenditure Approach
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GDP = C + I + G + (X-M)
(consumption + investment + government spending + net exports)
(consumption + investment + government spending + net exports)
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GDP Deflator
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a measure of the price level calculated as the ratio of nominal GDP to real GDP, times 100. Equation: GDP Deflator = (Nominal GDP/Real GDP) x 100.
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Real GDP
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GDP as measured with a set of constant base year prices.
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Nominal GDP
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GDP as measured in current-year prices.
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Unemployment Rate Equation
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(# unemployed persons / # persons in labor force) x 100
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Discouraged Workers
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individuals who would like to work but have given up looking for a job; these persons have left the labor force.
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Frictional Unemployment
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temporary unemployment experienced by people changing jobs; normal in a healthy economy.
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Structural Unemployment
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unemployment resulting from a skill or skill set becoming obsolete/no longer necessary for a job, typically due to technological change as AI replaces the need for skilled workers.
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Cyclical Unemployment
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unemployment as a result of a recession; indicative of an unhealthy economy, as the demand for labor has fallen.
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Natural Unemployment Rate (NUR)
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Frictional unemployment rate + Structural unemployment rate = NUR. To have both of these types of unemployment is typically indicative of a healthy economy.
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Core Inflation Rate
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the rate of inflation after excluding the effects of food and energy prices. (measured through observing these changes in the CPI.)
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Per-Capita GDP
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GDP divided by the total population. (Normally measured at midyear, but this midyear concept was not taught in class.)
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GDP Circular Flow Model
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Refer to image.
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Personal Consumption Expenditure Deflator
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a measure of prices of goods that consumers buy, calculated from data in the national income accounts, that allows yearly changes in the basket of goods that will better reflect actual consumer purchasing habits. equation: (nominal consumption expenditure / real consumption expenditure) x 100.
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Business Cycle
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alternating periods of economic expansion and economic recession.
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Slope On A Graph
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slope = (change in Y) / (change in X).
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Linear Equation
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Y = A + BX. (B= slope, A= Y-intercept.)
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Change in Demand
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the demand (D) curve shifts right or left.
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Change in Quantity Demanded
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there is movement along the D curve.
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Change in Supply
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the supply (S) curve shifts left or right
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Change in Quantity Supplied
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there is movement along the S curve.
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If Price Decreases...
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quantity demanded increases. (essentially, more of the good is bought.)
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If Price Increases...
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quantity demanded decreases. (less of the good is bought.)
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A Change In Price Results In:
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a movement ALONG a curve. (change in quantity supplied or demanded.)
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A Change In Supply or Demand Results In:
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a SHIFT in either the S or D curve.
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Surplus
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an occasion in which quantity supplied is greater than quantity demanded.
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Shortage
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an occasion in which quantity demanded is greater than quantity supplied.
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Congrats, You Studied Everything! For More Econ Study Tools:
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go to YouTube and check out Jacob Clifford's channel- his videos really help to easily explain hard-to-grasp concepts in economics, and he goes over everything in both micro and macro! Good luck 🙂
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