Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
12 Cards in this Set
- Front
- Back
What is economic growth?
|
An increase in the production of goods and services within a certain time period.
|
|
What are the four cycles defined in the Business Cycle?
|
Peak, recession, trough, and recovery.
|
|
What is the unemployment rate formula?
|
Unemployed divided by the number in Labor Force all times 100.
|
|
What are the three types of unemployment? Explain them.
|
1. Frictional unemployment- temporary, sometimes desirable.
2. Structual unemployment- longer time span, skills aren't marketable. 3. Cyclical unemployment- shifts in business cycle, length can vary. |
|
What is Okun's Law?
|
For every 1% point that the actual unemployment rate exceeds NRU, there will be negative GDP gap of 2%
|
|
What is a GDP Gap?
|
The difference between Actual GDP and Potential GDP.
|
|
How do you calculate inflation rate?
|
CPI of current year minus one of the previous year then divided by the previous year.
|
|
How does inflation impact different population segments?
|
Losers: fixed incomes, savers and creditors as purchasing power declines.
Unaffected: Social security income, debtors. |
|
What is aggregate demand?
|
The level of spending that occurs at every price level.
(Prices rise, spending falls) |
|
What is aggregate supply?
|
The level of real output produced by firms at every price level.
(firms produce more at higher prices) |
|
What is expansionary fiscal policy?
|
Seeks to improve economy through greater spending/lowering taxes.
|
|
What is contrastionary fiscal policy?
|
Seeks to restrain inflation by decreasing spending/raise taxes.
|