| A | B |
|---|
| trade deficit | Negative net exports. |
| exports | Sales of a country's goods and services to buyers in the rest of the world during a particular time period. |
| gross national product (GNP) | The total value of final goods and services produced during a particular period with factors of production owned by the residents of a particular country. |
| stock variable | A variable that is independent of time. |
| imports | Purchases of foreign-produced goods and services by a country's residents during a period. |
| transfer payments | Payments that do not require the recipient to produce a good or service in order to receive them. |
| trade surplus | Positive net exports. |
| government purchases | The sum of purchases of goods and services from firms by government agencies plus the total value of output produced by government agencies themselves during a time period. |
| personal consumption | A flow variable that measures the value of goods and services purchased by households during a time period. |
| net exports | Exports minus imports. |
| disposable personal income | The income households have available to spend on goods and services. |
| gross domestic income (GDI) | The total income generated in an economy by the production of final goods and services during a particular period. |
| per capita real GNP or GDP | A country's real GNP or GDP divided by its population. |
| cyclical unemployment | Unemployment in excess of the unemployment that exists at the natural level of employment. |
| nominal GDP | The total value of final goods and services for a particular period valued in terms of prices for that period. |
| unemployment rate | The percentage of the labor force that is unemployed. |
| recession | A sustained period in which real GDP is falling. |
| real GDP | The total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices. |
| deflation | A decrease in the average level of prices. |
| structural unemployment | Unemployment that results from a mismatch between worker qualifications and the characteristics employers require. |
| expansion | A sustained period in which real GDP is rising. |
| nominal value | A value expressed in dollars of the current period. |
| peak | The point of the business cycle at which an expansion ends and a recession begins. |
| base period | A time period against which costs of the market basket in other periods will be compared in computing a price index. |
| natural rate of unemployment | The rate of unemployment consistent with the natural level of employment. |
| frictional unemployment | Unemployment that occurs because it takes time for employers and workers to find each other. |
| business cycle | The economy's pattern of expansion, then contraction, then expansion again. |
| consumer price index (CPI) | A price index whose movement reflects changes in the prices of goods and services typically purchased by consumers. |
| trough | The point of the business cycle at which a recession ends and an expansion begins. |
| price index | Current cost of basket/base-period cost of basket |
| Rate of inflation | percentage change in index/initial value of index |
| labor force | The total number of people working or unemployed |
| private investment | The value of all goods produced during a period for use in the production of other goods and services. |
| GDP formula | consumption (C) + Private Investment (I) + Government Purchases (G) + Net Exports (XN : (x-M)) |
| 3 Economic Goals | 1. Promote economic Growth 2. Limit Unemployment 3. Keep Prices Stable |
| Final Goods | GDP does not include the value of intermediate goods. |
| GDP Use | 1. Compare previous year 2. Compare policy changes 3. Compare other countries |
| % Change GDP Formula | (Year 2 - Year 1 / Year 1) * 100 |
| Reasons for Higher GDP | 1. Economic System 2. Property Rights 3. Capital 4. Human Capital 5. Natural Resources |
| Not In GDP | 1. Intermediate Goods 2. Nonproduction Transactions 3. Non-market and illegal activities. |
| Two Ways to Calulate GDP | 1. Expenditures Approuach 2. Income Approach |
| Discouraged workers | People who are no longer looking for a job because they have given up and are no longer in the labor force. |
| underemployed workers | Someone who wants more hours but cannot get them. |
| inflation | The general rise in price levels over time. |
| disinflation | Prices increasing at slower rates. |
| Hurt by Inflation | Lenders, fixed incomes and Savers |
| Helped by inflaiton | Borrowers, Businesses |
| Nominal wage | Wage measured by dollars rahter than purchasing power |
| Real Wage | Wage adjusted for inflation |
| Causes of Inflation | 1. Over-Printing of Money 2. Demand-Pull Inflation 3. Cost - Push Inflation |
| Demand-Pull Inflation | Too many dollars chasing too few goods, Overheated economy with excessive spending and same amount of goods. |
| Cost-Push Inflation | Higher production costs increases overall price levels. (negative supply increases production costs) |
