Econ Test 2
What happened during the great depression?
Unemployment was high and output was falling.
John Mayner Cain's paper General Theory of Employment interest in money what did he argue?
To eliminate a depression a government should spend more to offset insufficient private spending.
What is economic growth?
Outward shift of the economics PPF curve.
What is a recession?
A session for which real GDP decreases for two full quarters.
The Unemployment rate generally _______ during recessions and _________ during expansions.
Over the last 20 years _______ has had the lowest unemployment rate.
What is inflation?
Process of rising prices.
When does the goverment have a budget defect?
When government spending excess tax receipts.
What is included as fiscal policy?
Which of the following is a policy of the federal reserve?
Changes in the money supply
Gross Domestic Product is the total __________ produced with a country in a given time period.
Market value of all fixed and intermediate goods and services.
What does the circular flow diagram indicate?
Households sale the services of factors productions firm.
What is an example flow variable?
Consumption expenditure by households.
What is capital?
Plant equipment and building owed by firms.
When you subtract depreciation from GDP what do you get?
NDP, net domestic product.
Consumption expenditures is the payment by households by what?
Goods and services.
What is the largest component of GDP?
Personal Consumption Expenditures
A new house accounts as what?
What is the business cycle?
Irregular pattern of upward and downward movement in production and jobs.
What is that definition of recession?
Negative growth rate in real GDP that last at least two quarters.
Define the working age population:
People over the age of sixteen who are not in jail, hospital, or any other institution.
Define labor force:
Sum of employed and umemployed
How do you calculate the unemployment rate?
One hundred times the number of people unemployed divided by the labor force.
What does the unemployment rate show?
Measure % of people who can not find a job.
What will decrease the unemployment rate?
Discouraged worked can lead the labor force.
What are aggregate hours?
Total number of hours worked by all people employed.
Who are job losers?
People who are laid off permanently or temporarily
What is frictional unemployment?
Normal labor market turnover.
What is structural unemployment?
Changes in technology
What is consumer price index?
Compares the cost of a typical basket of a good compound in period are to the cost of a typical basket of goods in period two.
CPI= Total expenditures of market basket - Current Year / Total Expenditure of Market Basket - Base Year
Econ Test 2