AP Econ Unit 2 Flashcards
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| 10691101644 | macroeconomics | looks at the economy as a whole (economy wide phenomena including inflation, unemployment, and economic growth) | 0 | |
| 10692132143 | macroeconomic goals | - stable prices - economic growth - full employment - economic freedom - economic efficiency - economic security - balance of trade - equitable distribution of income | 1 | |
| 10692328020 | inflation | an increase in the overall prices in the economy | 2 | |
| 10692337258 | problems with inflation | decreases peoples purchasing power (amount of goods and services that can be purchased with a given currency at a given price level) | 3 | |
| 10692509012 | causes of inflation | caused by gov't creating too much money relative to production | 4 | |
| 10692550309 | effects of inflation | short run tradeoff between inflation and unemployment | 5 | |
| 10692716516 | anticipated inflation | inflation where businesses and households can adjust | 6 | |
| 10692729264 | unanticipated inflation | inflation at a rate that comes as a surprise, either higher or lower than the rate expected | 7 | |
| 10692752365 | people HURT by unanticipated inflation | - fixed income receivers - pensioners - fixed wages and salaries - lenders or depositors - savers | 8 | |
| 10692776393 | people HELPED by unanticipated inflation | - people who pay a fixed amount - debtors - pension funds - annuity companies - life insurance companies | 9 | |
| 10692829925 | people UNAFFECTED by unanticipated inflation | - people who receive flexible incomes or pay flexible amounts - COLAs (cost of living adjustments) - adjustable rate lenders | 10 | |
| 10692575962 | GDP (Gross Domestic Product) | the market value of all FINAL goods and services produced within a country in a given period of time | 11 | |
| 10692604686 | what IS counted in GDP | - value of final goods, not intermediate goods (value is only counted once) - tangible goods (food, clothing, cars) - intangible services (haircuts, housecleaning, doctor visits) - goods and services CURRENTLY PRODUCED, not transactions involving goods produced in the past - includes all items produced in the economy and sold LEGALLY in markets | 12 | |
| 10692653849 | what IS NOT COUNTED in GDP | - excludes most items produced and consumed at home (never enter the marketplace) - excludes items produced and sold illicitly (illegal drugs) - excludes final transactions that are not for a service provided | 13 | |
| 10774105652 | expenditure approach | Y = C + I + G + NX | 14 | |
| 10774125423 | parts of expenditure approach | y = GDP C = Consumption - household spending on goods/services (no new housing) I = Investment - spending on capital equipment, inventories, structures, includes new housing G = Government Purchases - spending on goods ands services by local/state/federal gov't (doesn't include transfer payments) NX = Net Exports - Exports minus imports | 15 | |
| 10774176047 | income approach | wages and salaries (compensation) + rents + interest + profits, corporate (corporate income taxes, dividends, undisturbed corporate profits + proprietor's income | 16 | |
| 10692688039 | real GDP | the production of goods and services at CONSTANT prices (base year), adjusted for inflation | 17 | |
| 10692696950 | nominal GDP | the production of goods and services at CURRENT prices (current year), NOT adjusted for inflation | 18 | |
| 10692859118 | GDP Deflator | a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 - tells you the rise in nominal GDP that is attributable to a raise in prices rather than a rise in the quantities produced |  | 19 |
| 10722112606 | employment | the number of people currently employed in the economy, considered employed if have spent most of previous week working at a paid job | 20 | |
| 10722318835 | unemployment rate | percentage of labor force that is unemployed |  | 21 |
| 10722372128 | complications when calculating unemployment rate | - hard to distinguish between a person who is unemployed and a person not in the labor force - discouraged workers - people who want to work but gave up after unsuccessful job search (not in unemployment statistics - understates problem) | 22 | |
| 10722142348 | unemployment | measures the number of people who are able to work, but do not have a job/are looking for a job during a period of time | 23 | |
| 10722186112 | cyclical unemployment | year to year fluctuations in unemployment around its natural rate, associated with short term ups/downs of the business cycle ex. slumping sales lead to cashier being laid off | 24 | |
| 10722206781 | frictional unemployment | unemployment that results from the time that it takes to match workers with jobs (it takes time for workers to search for jobs that best suit their tastes/skills) ex. individual refuses to work for minimum wage | 25 | |
| 10722236376 | structural unemployment | unemployment caused by a mismatch in the demand in the labor market and the skills and locations of workers seeking employment ex. airport security agents lose jobs as new scanning technology improves | 26 | |
| 10722160851 | labor force | the total number of workers, including both the employed and the unemployed | 27 | |
| 10722169608 | labor force participation rate | the percentage of the adult population (16+) that is in the labor force |  | 28 |
| 10722183050 | recession | two consecutive quarters (6 months) of negative growth in real GDP | 29 | |
| 10722454279 | factors of production that shift PPC outward | Capital goods and services Human resources Entrepreneurship Natural resources Technology | 30 | |
| 10722501254 | circular flow diagram | visual model of the economy that shows how dollars flow through markets among households and firms |  | 31 |
| 10722475800 | role of FIRMS in circular flow model | - produce and sell goods and services - buy and use factors of production | 32 | |
| 10722491797 | role of HOUSEHOLDS in circular flow model | - buy and consume goods and services - own and sell factors of production | 33 | |
| 10773957697 | why does output fluctuate? | there are three basic sources for economic growth such as increases in labour, increase in capital and increase in efficiency of the factors of production. Just like increases in inputs of factors of production can cause output to go up, anything that causes labour, capital or efficiency to go down will cause a decline in output or at least a decline in its rate of growth. | 34 | |
| 10774035624 | full employment | all who are able and willing to work are employed, no cyclical unemployment | 35 | |
| 10774223879 | causes of economic growth | - natural resources - physical capital or infrastructure - population or labor - human capital - technology - law | 36 |