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80 Cards in this Set
- Front
- Back
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vocab
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effective achieving its intended effect
interest rate price of money that is borrowed or saved money supply amount of money available in the economy, including money in circulation and demand deposits trend general direction in which something moves |
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vocab
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Gross Domestic Product (GDP) market value, in dollar amounts, of all final goods and services produced in a year
GDP per capita GDP divided by the number of people living in a country |
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vocab
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aggregate adding things together
economic cycle time from one economic peak to another economic peak; behavioral pattern in the economy that includes growing and shrinking phases Gross Domestic Product (GDP) market value, in dollar amounts, of all final goods and services produced within a country's borders Gross National Product (GNP) market value, in dollar amounts, of all final goods and services produced by domestically owned factors of production macroeconomics the study of the whole economy microeconomics the study of individual parts of the economy net exports exports minus imports |
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_____ is the study of the whole economy.
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Macroeconomics
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Select the items that are included in macroeconomics.
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price of cars
prices of goods and services used by most people number of people without jobs in the country |
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The time from one economic peak to another economic peak (think roller coaster ride) is called the _____.
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economic cycle
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When the economy is growing, producers are making _____ goods and services.
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more
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Gross Domestic Product (GDP) includes _____.
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exports minus imports
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In 1 or 2 sentences, explain the statement: "Macroeconomics is about the bigger picture."
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macroeconomics is the study of the whole economy. Macroeconomics looks at the effects of all producers—those who make and sell jeans, cell phones, restaurants, clothing, cars, computers, and every other good and service. Macroeconomics also looks at the effects of all consumers—all the people who buy goods and services in a country
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NOTES
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Putting It Together: One person's spending (such as buying a meal at your family's restaurant) is another person's income (such as your family's).
In this lesson, you were introduced to macroeconomics, or the study of the whole economy. You also compared macroeconomics to microeconomics (which studies individual parts of the economy). For example, microeconomics may look at the price of a good, such as a cell phone. But macroeconomics studies the prices of goods and services bought by most people in the country. Next you learned about the economic cycle. You took a ride on the roller coaster and saw that an economy has periods of growths, peaks, periods of falling, and troughs. You learned that a growing economy is good for consumers and producers, which means it is good for the whole country. Finally, you learned about a way to measure economic performance called Gross Domestic Product (or GDP). GDP is the market value, in dollar amounts, of all final goods and services produced in a year. GDP incl |
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vocab
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economic cycle behavioral pattern in the economy that includes growing and shrinking phases
Gross Domestic Product (GDP) market value, in dollar amounts, of all final goods and services produced within a country's borders Gross National Product (GNP) market value, in dollar amounts, of all final goods and services produced by domestically owned factors of production total income money earned from all producers in a country total output all goods and services produced by using the factors of production |
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Total output refers to the goods and services made by _____ producers in a country.
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all
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Total _____ is the money earned from all producers in a country.
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income
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When the economy is growing, total output is _____ and total income is _____.
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increasing, increasing
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When the economy is shrinking, total output is _____ and total income is _____.
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decreasing, decreasing
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_____ includes the goods and services made in a country, and _____ includes goods and services made from domestically owned factors of production.
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Gross Domestic Product, Gross National Product
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Consider a French-owned cheese factory located in Paris, France. Are the goods made by the cheese factory part of the U.S. Gross Domestic Product (GDP)? Are these goods included in the U.S. Gross National Product (GNP)? In 1 or 2 sentences, explain your response.
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No it is not. It is included in the French GDP because it is french owned and is located in France.
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NOTES
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Economic Phase Change in Total Output Change in Total Income
Growing Total output increasing Total income increasing Peak Total output hits its highest level of the economic cycle Total income hits its highest level of the economic cycle Shrinking Total output decreasing Total income decreasing Trough (Bottom) Total output hits its lowest level of the economic cycle Total income hits its lowest level of the economic cycle Part of U.S. Gross Domestic Product (GDP)? Part of U.S. Gross National Product (GNP)? Food from an American-owned pizza store in Chicago Yes Yes Service from an American-owned hospital in St. Louis Yes Yes Clothes from an American-owned store in Los Angeles Yes Yes Cell phones from an American-owned store in Dallas Yes Yes Cars produced by a Japanese-owned company located in North Carolina Yes No Services provided by American-owned restaurant in London, England No Yes In this lesson, you were introduced to total output and total income. You lea |
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vocab
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consumption buying of final goods and services by households
final goods and services end products of the production process investment putting money into something financial, in hopes of earning more money net exports exports minus imports nominal GDP Gross Domestic Product in current dollars real GDP Gross Domestic Product adjusted for price changes |
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The _____ adds up the market prices of final goods and services.
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product approach
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The _____ adds up the money earned by producers plus taxes paid to the government.
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income approach
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The _____ adds up the spending by different parts of the economy, such as consumption, investment, government spending, and net exports.
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expenditure approach
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Select the items that apply to calculating the Gross Domestic Product.
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final goods and services
intermediate goods and services last year's products |
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Gross Domestic Product that is adjusted for price changes is called _____.
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real Gross Domestic Product
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You are hired as an economist to find out if the Gross Domestic Product (GDP) in 2011 was more than the GDP in 2010. In 1 or 2 sentences, explain which measurement you would use: nominal GDP or real GDP.
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Real Gross Domestic Product is the Gross Domestic Product adjusted for price changes. This means that real GDP takes into account changes in price levels. It also allows people to compare GDP from different years and really see the changes in production levels.
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NOTES
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Consumption: The largest part of GDP in the United States (and other industrialized countries) is consumption. In fact, 60 percent of the GDP in these countries comes from people like you who buy goods and services. Consumers buy durable goods, which last a long time, like cars and televisions. They also buy nondurable goods, which do not last as long, such as food and gas. Finally, consumers purchase services, such as getting a haircut or going to the movies.
Investment: Investments come from two groups of people: businesses and consumers. Remember that businesses can earn profits. They can also use these profits to make their businesses even bigger, such as by building more factories, buying more machines, and hiring more workers. Having bigger businesses means that companies can produce more goods, make more sales, and earn even more money. So, when a business spends money on itself, it is making an investment. It is putting money into something—in this case, a bigger business—in hopes of earning more |
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NOTES
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In this lesson, you learned about the product and income approaches to calculating Gross Domestic Product (GDP). The product approach is about adding up the prices that people pay to buy goods and services. The income approach adds up the money earned by producers and the taxes collected by the government.
Next you took a look at the expenditure approach. This approach has four main parts: Consumption: spending by households on goods and services Investment: spending by businesses and consumers (on houses) Government: spending by the government (such as public goods) Net Exports: exports minus imports Finally, you examined the difference between nominal Gross Domestic Product and real Gross Domestic Product. Nominal Gross Domestic Product is in current dollars, but real Gross Domestic Product is adjusted for price changes. |
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vocab
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GDP per capita GDP divided by the number of people living in a country
material goods products that are bought and sold, including food, clothes, computers, and cars standard of living comfort level that people experience from having goods and services available to them |
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Real GDP per capita for the United States is calculated by dividing real GDP by the _____.
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number of people living in one state
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During a period of _____, real GDP per capita can increase.
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economic growth
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Real GDP per capita is the most popular way to measure _____.
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standard of living
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One of the problems with using real GDP per capita to determine the quality of life is that it does not fully account for _____.
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negative externalities
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Select examples of unpaid work that are not included in the real GDP per capita.
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taking care of your parents
washing dishes doing laundry |
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In 2 or 3 sentences, explain why real GDP per capita does not reflect the actual distribution of wealth.
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Because there may be a few very wealthy people while the rest live in abject poverty. GDP is an average, and averages do not accurately reflect real-life statistics
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NOTES
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In this lesson, you explored real GDP per capita. This is the most popular way to measure a country's standard of living, or the comfort level that people experience from having goods and services available to them.
You took a look at how changes in real GDP affect real GDP per capita. For example, economic growth (such as the growth that results from more investments) can mean higher real GDP per capita. Population changes can also affect real GDP per capita. Finally, you took a look at some of the problems with using real GDP per capita to determine the quality of life. For example, real GDP per capita does not include unpaid work (such as volunteer work or housework) or show the distribution of wealth. It also does not fully account for changes in the quality of life or negative externalities. In this problem set, you'll be asked to answer questions on these topics. |
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Vocab
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GDP per capita GDP divided by the number of people living in a country
Human Development Index (HDI) quality of life measurement that includes form of GDP per capita, how long people are expected to live, and education standard of living comfort level that people experience from having goods and services available to them |
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Examining the real GDP per capita in different countries allows economists to compare _____ in different parts of the world.
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standards of living
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Countries with the highest Gross Domestic Product (GDP) _____ have the highest GDP per capita.
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never
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Select other ways to measure the quality of life in a country besides the real GDP per capita.
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Human Development Index
Genuine Progress Indicator Index of Social Health |
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Other standard of living measurements besides real GDP per capita may include _____.
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education
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According to the United Nations, many countries with very high development are located in _____, and many countries with low development are located in _____.
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Europe, Africa
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NOTES
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You already know that real GDP per capita is used to measure the standard of living in a country. By comparing the GDP per capita in different countries, you can gain a better understanding of the different qualities of life around the world. Remember that GDP per capita depends on both a country's GDP (or total output) and its population. So let's begin by looking at the ten economies with the highest Gross Domestic Product (estimated for the year 2009).
Rank Country GDP 1 European Union $14,510,000,000,000 2 United States $14,260,000,000,000 3 China $8,789,000,000,000 4 Japan $4,137,000,000,000 5 India $3,560,000,000,000 6 Germany $2,811,000,000,000 7 United Kingdom $2,149,000,000,000 8 Russia $2,116,000,000,000 9 France $2,110,000,000,000 10 Brazil $2,025,000,000,000 Note: The European Union includes some of the countries in the table. These countries on their own have large GDPs. Comparing GDP per Capita Does having the highest GDP mean that a country also has the hi |
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NOTES
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In this lesson, you compared the standards of living in different parts of the world. You began by looking at the countries that produce and sell the most goods and services, or have the highest GDP. Then you learned that most of these countries were not the ones with the highest GDP per capita.
Next you examined alternative ways to measure the standard of living, including the Human Development Index, the Genuine Progress Indicator, and the Index of Social Health. These measurements tried to factor in education, how long people live, health care coverage, and household work. Finally, you took a look at the quality of life in different parts of the world, using the United Nations' Human Development Index. With the help of a map, you also learned the locations of many countries with very high development and many countries with low human development. |
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vocab
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externality unintended consequence
national debt total amount of money the federal government owes personal income tax tax paid by individuals on money they earn property right the right to exclude others from using the good or service and the right to transfer the ownership or use the resources to others public good something that can be used by everyone, provides benefits to more than one person at a time, and whose use cannot be restricted to only those people who have paid for it |
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_____ are sources of revenue for both federal and state governments. Individuals pay this tax from the money they earn.
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Personal income taxes
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The largest amount of money the government lays out is for the transfer program, _____. And its largest expenditure is for _____.
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public goods and services
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By having antitrust laws, the government _____ in the marketplace.
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increases competition
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NOTES
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In this lesson, you reviewed the roles of the government in the marketplace. First, you explored the sources of revenue for federal, state, and local governments. You also took a look at how the U.S. government spends most of its money.
Next, you explored how the government provides public goods and services. These products can be used by everyone, can provide benefits to more than one person at a time, and cannot be restricted to only those people who have paid for them. You also took a look at how the government intervenes in the marketplace to increase competition. These actions include antitrust laws and enforcing property rights. Finally, you explored how the government provides safer environments by imposing regulations, such as ones that reduce negative externalities. |
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vocab
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cyclical unemployment unemployment that happens when the economy is growing slowly or shrinking
labor force people who are sixteen years old or older who are actively seeking work unemployment number of working-age people who do not have jobs unemployment insurance money that the government gives to unemployed people who meet certain requirements unemployment rate percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for work |
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_____ occurs with economic downturns in the economic cycle.
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Cyclical unemployment
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_____ refers to the percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for work.
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Unemployment rate
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Brian has given up looking for a job. He has searched for more than a year and does not believe that a job for him exists. He is _____ in the unemployment rate.
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counted
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Select the items that describe possible problems with being unemployed and not earning income.
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People cannot afford to buy food.
People cannot support their families. People cannot afford housing. |
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The government provides _____ to people out of work who are actively looking for new jobs.
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unemployment insurance
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In 1 or 2 sentences, explain how unemployment insurance helps people who do not have jobs.
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If a person loses his or her job, then he or she may collect unemployment insurance. This money can help pay the bills while a person is looking for a new job. Unemployment benefits can be collected for up to twenty-six weeks in the United States and even longer during more severe economic downturns.
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NOTES
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So what happens to unemployment during an economic downturn, when the economy shrinks)?
Businesses make fewer investments, so new jobs are not created. Businesses earn less revenue and cut costs. This includes labor costs (or the costs of having employees). Cutting labor costs means firing people. Businesses may close, which means all the people who work in these places lose their jobs. |
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NOTES
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Unemployment that results from economic downturns is just one kind of unemployment. Take a look:
Cyclical Unemployment: Unemployment that happens when the economy is growing slowly or shrinking (think: economic downturns). Frictional Unemployment: Unemployment that happens when people leave their jobs to look for new ones, or when students finish school and are looking for jobs. Structural Unemployment: Unemployment that happens from the changes in the structure of the economy, such as when jobs are cut because computers replace working people. Seasonal Unemployment: Unemployment that happens because certain periods of times require more workers and other times require fewer workers. For example, more people are hired by department stores during the holiday season because there are more customers. But then after the holiday times, the department stores eliminate these jobs. |
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NOTES
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Think about the definition of the unemployment rate: the percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for work. Who would be included in this group? Take a look:
A high school student looking for a part-time job A college student who recently graduated and is looking for a job in teaching A single mom who is looking for a job in marketing Parents who are searching for jobs after their business closed A grandparent who is looking to return to the workforce |
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NOTES
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the unemployment rate is not a perfect measure, because it does not include two groups of people who could be part of the labor force:
The unemployment rate does not include workers whose job opportunities are so poor that they are not even looking for work anymore. This group consists of people who want to be part of the labor force but have given up actively looking for jobs. The unemployment rate does not include part-time workers who are looking for full-time work. These workers would like to be more a part of the labor force. Their time and skills are not being utilized fully because they would like to work more hours but cannot. |
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NOTES
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In this lesson, you reviewed the world of unemployment. First, you explored different kinds of unemployment, such as cyclical unemployment that is linked to the economic cycle. Frictional, structural, and seasonal unemployment also describe situations in which working-age people do not have jobs.
Next, you learned about the unemployment rate. This is not a perfect measure of unemployment because it does not include people who have given up looking for work and people who are working part-time but would like to have full-time jobs. Finally, you learned how the government helps unemployed people. Unemployment insurance is offered to people who meet certain requirements, such as actively looking for work. |
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Vocab
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Consumer Price Index (CPI) average change in prices of commonly used goods and services
inflation increase in the prices of commonly used goods and services interest rate price of money that is borrowed or saved money supply amount of money available in the economy, including money in circulation and demand deposits purchasing power person's ability to buy goods and services, given his or her income |
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_____ is the amount of money available in the economy, including the money in your wallet and demand deposits.
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Money supply
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Inflation is a(n) _____ in the prices of many goods and services, which _____ purchasing power.
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increase, decreases
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_____ is caused when the Federal Reserve increases the money supply.
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Monetary inflation
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The _____ is used to measure price changes in commonly used goods and services, such as food and housing.
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Consumer Price Index
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An interest rate is the price of money _____ or _____.
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borrowed, saved
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NOTES
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Summing It Up
Federal Reserve decreases the money supply interest rates rise individuals and businesses borrow less money for consumption and investments consumption and investments go down Gross Domestic Product (GDP) goes down economy is growing more slowly, or not at all (economic downturn) Federal Reserve increases the money supply interest rates fall individuals and businesses borrow more money for consumption and investments consumption and investments go up Gross Domestic Product (GDP) goes up economic growth In this lesson, you explored money, inflation, and interest rates. First, you looked at monetary and price inflations. You also saw that inflation decreases purchasing power and is measured by the Consumer Price Index. Next, you learned about interest rates. You learned that interest rates are the prices of both money saved and money borrowed. When interest rates change, people's incentives for saving and borrowing money also change. Businesses that borrow money for invest |
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vocab
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confidence trust
contractionary policy actions intended to slow economic growth expansionary policy actions intended to encourage (or expand) economic growth fiscal policy when the government uses government spending and taxes to affect economic performance monetary policy when the central bank uses money supply and interest rates to affect a country's economy |
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Fiscal policy is carried out by the _____ and involves spending and taxes.
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government
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Monetary policy is carried out by the _____ and involves the money supply and interest rates.
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Federal Reserve
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Expansionary policies are intended to _____ economic growth, and contractionary policies are intended to _____ economic growth.
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increase, decrease
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People need to have _____ in the economy to spend money.
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confidence
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The Federal Reserve _____ the money supply to lower inflation.
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decreases
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NOTES
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In the United States, the Federal Reserve uses monetary policy for different things, including helping the economy to grow and controlling inflation. In many other industrialized countries, the central banks use monetary policy mostly—if not entirely—to control inflation. In these places, a central bank monitors the prices of commonly used goods and services. Then they would use monetary policy to effect price changes. In the United States, having different goals can be tricky because the goals can conflict. For example, suppose you want to help the economy grow, but you also want to keep inflation low. What are your options?
You can increase the money supply and lower interest rates. This encourages economic growth, but it can also increase inflation. You can decrease the money supply and raise interest rates. This will help keep inflation low, but it can cause an economic downturn. As you can see, you can choose economic growth (and lower unemployment rates) with higher inflation. Or you can choos |
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NOTES
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In this lesson, you reviewed fiscal policy and monetary policy. You explored how the government uses fiscal policy and the Federal Reserve uses monetary policy to affect the U.S. economy. You also learned that expansionary policies—by the government or the Federal Reserve—are actions intended to make the economy grow. But contractionary polices by these institutions are actions intended to slow economic growth.
Next, you learned that confidence affects the outcomes of both monetary and fiscal policy. Both the Federal Reserve and the government can make more money available for people to spend. But, if individuals and businesses do not have confidence in the economy, then they may not react by spending the money and causing economic growth. Finally, you took a look at how the government and Federal Reserve may pursue different goals. Their goals partly determine how the economy is affected by their actions. In this problem set, you'll be asked to answer questions on these topics. |
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Economics – Unit 5: The Macroeconomy
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REVIEW
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Vocab
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Consumer Price Index (CPI) average change in prices of commonly used goods and services
economic growth continual rise in a nation's production of goods and services fiscal policy when the government uses government spending and taxes to affect economic performance GDP per capita GDP divided by the number of people living in a country Gross Domestic Product (GDP) market value, in dollar amounts, of all final goods and services produced in a year Gross National Product (GNP) market value, in dollar amounts, of all final goods and services produced by domestically owned factors of production Human Development Index (HDI) quality of life measurement that includes a form of GDP per capita, how long people are expected to live, and education inflation increase in the prices of commonly used goods and services interest rate price of money that is borrowed or saved macroeconomics the study of the whole economy monetary policy when the central bank uses money supply and interest rates to affect |
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NOTES
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Overview
In this Unit, you learned about the bigger picture—the macroeconomy. Rather than focusing on the decisions of one firm or the job market in one industry, you took a look at the choices and effects of all firms and markets in a country. You examined total measurements, such as total income and total output. You also learned about the most commonly used measurement for total production of final goods and services—the Gross Domestic Product (GDP). Next, you looked at other economic indicators. An economic indicator is a measurement that describes economic activity. The Gross Domestic Product is a kind of indicator. It shows you how the economy is doing. It also shows you where the economy is in the economic cycle. There are many other economic indicators that show you how the economy is performing, such as inflation and unemployment. Another indicator is the GDP per capita. This is an indicator of the standard of living (or quality of life) in a country. Like the Gross Domestic Product, GDP pe |
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Economics – Unit 6: Course Review and Exam
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SEMESTER REVIEW
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Review
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This lesson is intended to give a synopsis of the main concepts in Economics. It should not take the place of an in-depth review of material and assignments throughout the course. You should also be familiar with vocabulary terms from the glossary section of each unit even though the terms are not reviewed specifically in this lesson.
Unit 1 - Decisions, Decisions In this unit, we examined the process of decision making. Scarcity is the most important reason that people have to make decisions. Individuals, businesses, and governments make choices to attain goals. Decision-makers are influenced by incentives and analyze expected values of choices in order to maximize satisfaction. The decisions of market participants drive the economy. Marginal analysis is a decision-making process. As long as the marginal benefit of an activity is greater than the marginal cost, people are better off doing more of the activity. But, when the marginal cost is greater than the marginal benefit, then people are better |
