AP Macroeconomics Unit 2 Flashcards

6479894889	Gross Domestic Product	The total dollar value of all final goods and services produced within the borders of a country during a specific time period, usually one year.	0
6479894890	final good	a new good that undergoes no further processing before it is sold to consumers (Counted in GDP)	1
6479894891	intermediate good	good purchased for resale or for use in producing another good (not counted in GDP)	2
6479894892	circular flow	a model of the movements of goods, services, resources, and money in an economy	3
6479894893	product market	market where producers offer goods and services for sale to households, other businesses, and the government	4
6479894894	resource market	a market in which households sell and firms buy resources (land, labor, capital, entrepreneurship)	5
6479894895	consumption	spending by households on goods and services, with the exception of purchases of new housing	6
6479894896	investment	business spending on capital equipment, inventories, and structures and household purchases of new housing	7
6479894897	net exports	spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)	8
6479894898	income approach	Calculating GDP by adding up all earnings from resources used to produce output in the nation during the year (Wages + Rent + Interest + Profit)	9
6479894899	Expenditure approach	calculating GDP by adding up spending on all final goods & services produced in the nation during the year (Consumer Spending (C) + Investment (I) + Government Spending (G) + Net Exports (Xn)	10
6479894900	Net Domestic Product	gross domestic product minus depreciation	11
6479894901	National Income	the total value of all income in a nation (wages and profits and interest and rents and pension payments) during a given period (usually 1 yr)	12
6479894902	Personal Income	monies received by households (National Income + transfer payments)	13
6479894903	Disposable Income	personal income minus personal taxes	14
6479894904	GDP per capita	total value of goods and services produced in a year divided by the population	15
6479894905	Gross National Product	The total value of goods and services, including income received from abroad, produced by the citizens of a country within a specific time period, usually one year.	16
6479894906	Real GDP	GDP after adjustments for inflation	17
6479894907	Nominal GDP	the GDP measured in terms of the price level at the time of measurement (unadjusted for inflation)	18
6479894908	Inflation	an increase in the overall level of prices in the economy	19
6479894909	demand pull inflation	increases in the price level resulting from an excess of demand over output	20
6479894910	cost push inflation	Increases in the price level due to a rise in the cost of production.	21
6479894911	real interest	The rate of interest adjusted for inflation. (Nominal interest rate - inflation rate)	22
6479894912	nominal interest rate	the stated interest rate on a loan	23
6479894913	unemployment rate	the percentage of people in the civilian labor force who are not working but are looking for jobs	24
6479894914	structural unemployment	unemployment that occurs when workers skills do not match the jobs that are available	25
6479894915	frictional unemployment	unemployment caused by workers changing jobs or waiting to go to new ones	26
6479894916	cyclical unemployment	unemployment that rises during economic downturns and falls when the economy improves	27
6479894917	natural rate of unemployment	The "normal" unemployment rate due to frictional and structural conditions in labor markets. It is the unemployment rate that occurs even when the economy is operating at a maximum sustainable rate of output.	28
6479894918	Okun's law	for every 1% of unemployment above the natural rate a negative GDP gap of 2% occurs	29
6479894919	GDP Gap	the difference between the actual GDP and the potential GDP that could be produced if all resources were fully employed.	30
6479894920	Business Cycle	recurring fluctuations in economic activity consisting of recession and recovery and growth and decline	31
6479894921	Expansion	a period of economic growth as measured by a rise in real GDP and fall in the unemployment rate	32
6479894922	Peak	the height of an economic expansion, when real GDP stops rising and the unemployment rate is at its natural rate	33
6479894923	Contraction	A period of economic decline marked by falling real GDP and rising unemployment	34
6479894924	recession	two or more consecutive quarters of decline in Real GDP	35
6479894925	trough	the lowest point in an economic contraction, when real GDP stops falling and unemployment rates are high	36
6479894926	recovery	the phase in which unemployment begins to decrease, demand for goods and services increases, and GDP begins to rise again	37
6479894927	cyclical goods	Products for which demand is strongly affected by changing income.	38
6479894928	non-cyclical goods	Products for which demand is not usually affected by changes in the economy	39