Macro Economics

the fall in total surplus that results from a market distorition, such as a tax

the price of a good that prevails in the world market for that good

a tax on goods produced abroad and sold domestically

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena including inflation, unemployment, and economic growth.

The market value of all final goods and services produced within a country in a given period of time.

spending by households on goods and services, with the exception of purchases of new housing

spending on capital equipment, inventories, and structures, including household purchases of new housing

spending on goods and services by local, state, and federal governments.

spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).

a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 (Nominal GDP/Real GDP) * 100

a measure of the overall cost of teh goods and services bought by a typical consumer

the percentage change in the price index from the preceding period. inflation rate = (CPI_year2-CPI_year1)/CPI_year1 X 100

a measure of the cost of a basket of goods and services bought by firms.

the automatic correction of a dollar amount for the effects of inflation by law or contract.

the interest rate as usually reported without a correction for the effects of inflation

• the interest rate corrected for the effects of inflation.
• Real interest rate = nominal interest rate - inflation rate

the amount of goods and services a worker produces in each hour of work.

the stock of equipment and structures that are used to produce goods and services.

the knowledge and skills that workers acquire through education, training, and experience.

the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits

society's understanding of the best ways to produce goods and services

the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases

the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich

the total number of workers, including both the employed and the unemployed.  Labor force = Number of employed + Number of unemployed.

the percentage of the labor force that is unemployed. Unemployment rate = (Unber of unemployed/labor force) X 100%

the percentage of the adult population that is in the labor force.  Labor-force participation rate = (Labor force/Adult population) X 100%

the normal rate of unemployment around which the unemployment rate fluctuates.

the deviation of unemployment from its natural rate

individuals who would like to work but have given up looking for a job.

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one.

the process by which workers find appropriate jobs given their tastes and skills.

a government program that partially protects workers' incomes when they become unemployed.

a worker association that bargains with employers over wages and working conditions.

the process by which unions and firms agree on the terms of employment

the organized withdrawal of labor from a firm by a union

above-equilibrium wages paid by firms in order to increase worker productivity.