Key Concepts and
Questions:
* How are Gross Domestic Product, inflation,
and unemployment calculated?
* What are the economic costs of inflation and
unemployment?
* Real values, unlike nominal values, are not
distorted by price level changes.
* Price indices are used to convert nominal
values to real values.
* Full employment does not mean 100%
employment.
* What are the actual levels of unemployment,
inflation, and economic growth in the USA?
Terms and Topics:
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Macroeconomics
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Gross Domestic Product (GDP)
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Gross National Product (GNP)
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Expenditure approach
(C+I+G+X)
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X=net exports
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Income approach
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Double counting
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Intermediate goods
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Final goods and services
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Purely financial
transactions
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Public transfer payments
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Private transfer payments
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Securities transactions
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Non-market transactions
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Inventories
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Second hand sales
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Short run GDP fluctuations
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Long run economic growth
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Private/public demand shocks
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Private/public supply shocks
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Investment spending
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Net vs. gross investment
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Capital stock
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Growing vs. contracting
economy
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Depreciation
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Depreciation vs. investment
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Price index
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Market basket
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Base year
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Weighting items in basket
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Calculation of CPI
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Calculation of inflation
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Deflation
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Demand pull inflation
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Cost push inflation
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Who does inflation help?
hurt?
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Nominal GDP
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Real GDP
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GDP deflator
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The business cycle
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Actual GDP
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Long run trend of GDP
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Depression
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Recession
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Business cycle and durable
goods
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Business cycle and
non-durable goods
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Unemployment
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Full employment
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Natural rate of unemployment
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Civilian labor force
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Calculation of unemployment
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Seasonal unemployment
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Frictional unemployment
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Search unemployment
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Wait unemployment
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Cyclical unemployment
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Structural unemployment
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Discouraged workers
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Part time labor
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GDP Gap
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C.O.L.A.
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Weaknesses of GDP as a
measure of economic health/welfare
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Why do prices rise as an
economy potential GDP approaches full employment?
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How do interest rates,
unemployment rates, inventories, aggregate demand, real GDP, and inflation
rates relate to the business cycle?