Three important ideas: People are rational. People respond to incentives. Optimal decisions are made at the margin.
How an economy answers these questions: What goods and services will be produced? How will they be produced? Who will receive the goods and services?
Role of models in economic analysis.
Distinguish between microeconomics and macroeconomics.
People must make choices as they try to attain their goals. The choices people make reflect the trade-offs made necessary by scarcity.
Become familiar with important economic term: -Scarcity and tradeoff -Opportunity cost -Positive and normative economics -Efficiency of markets
Chapter 19
GDP
Factors of production (labor, capital, natural resources, and entrepreneurship)
The Bureau of Economic Analysis (BEA) divides its statistics on GDP into four major categories of expenditures: consumption, investment, government purchases, and net exports.
GDP measurement
Real GDP versus Nominal GDP
Components of spending in GDP of the United States
Federal budget deficit
Federal government debt
GDP deflator
Measures of total Income
Chapter 20
Labor force and Unemployment
Types of unemployment
Labor force participation rate
Unemployment rate
Factors that determine the unemployment rate
Inflation
Measuring Inflation
CPI
PPI
Inflation and unemployment are key macroeconomic problems. It is essential to understand how these concepts are defined and computed.
The U.S. Bureau of Labor Statistics uses the results of the monthly household survey to calculate the unemployment rate and the labor force participation rate.
Chapter 21
The U.S. economy has experienced both long-run economic growth and the business cycle.
Long-Run Economic Growth
Labor productivity
Potential GDP
Saving vs. investment
Financial System
Loanable funds
Real interest rate
Business cycle
Recession
The Great Depression
You May Also Find These Documents Helpful
-
• The unemployment rate is calculated each month by the U.S. Bureau of Labor Statistics. The survey consists of 50,000 households in about 2,000 counties and cities in all 50 states. Simple Random…
- 723 Words
- 3 Pages
Good Essays -
Government: government purchases made with federal, state and local taxes AND transfer payments (if income is up, transfer payments are down)…
- 1388 Words
- 6 Pages
Powerful Essays -
| depends on the idea that increases in interest rates increase the quantity of money supplied.…
- 33513 Words
- 135 Pages
Powerful Essays -
Instructions. The final exam will consist of 2 questions chosen from the following list and 1 from the midterm list. Your answers must be written in blue or black ink in the exam booklets provided in class; answers in any other color or pencil will not be graded and result in a zero. Please start each question on a new page of the booklet. On the front page of your first booklet, you should only write your name, “Econ 4130 Final”, the number of booklets used, and if you are a graduating senior as shown in the example “Front Page of Exam Booklet” on Carmen. If you use multiple booklets be sure to label them like “2 of 3” so it is obvious what order they go in. Furthermore, no answers written on the front page will be graded. Good luck! 1. Briefly describe the Industrial Revolution. Provide an explanation with explicit examples as to why Britain was the first to industrialize. 2. According to the data shown in class, was nearly everyone malnourished until the 20th ? Why or why not? Briefly describe a Waaler surface. If you were to plot average height and weight over time on a Waaler surface, what would it show? How does it help us to know the reasons behind the decline mortality rates?…
- 380 Words
- 2 Pages
Satisfactory Essays -
The coupon rate is the value of the coupon expressed as a percentage of the face value of the bond…
- 1190 Words
- 5 Pages
Good Essays -
This information influences whether businesses will save or invest, hire or fire, and survive or die. The Nominal GDP is a little different in such that the change in price is not accounted for. Unemployment rate refers to the percentage of the American population that is eligible to work but are current jobless. Inflation rate is the percentage change in the increase of the price of goods and services. Interest rate is defined as the annual percentage divided by the principle balance owed monthly on borrowed money. Economists use gross domestic product, unemployment rate, and interest rates as tools to determine economic trends and predict the future changes in the economy. They try to manipulate the frequency, duration, and extremes of those changes; a never-ending effort to minimize the roller coaster effect. Following is a list of loose definitions for those tools. The gross domestic product is expressed in two terms, real GDP or nominal GDP. The real GDP has been adjusted to account for inflation, and the nominal GDP has not been adjusted. Economists use the Real GDP to show practical relevance and to allow a comparison of apples to apples over time. Household consumption, firm…
- 736 Words
- 3 Pages
Good Essays -
Consumer surplus: the difference between market price and what consumers (as individuals or the market) would be willing to pay. It is equal to the area above market price and below the demand curve…
- 2275 Words
- 9 Pages
Powerful Essays -
b. How is the unemployment rate calculated? What is the Natural Rate of Unemployment? Do…
- 342 Words
- 2 Pages
Satisfactory Essays -
* The federal government uses monetary and fiscal policies, or stabilization policies, to keep the economy healthy. The government uses methods and theories to avoid the two problems that destabilize the economy—unemployment and inflation. Unemployment can be classified as cyclical, structural, seasonal, or frictional. High unemployment is a sign that the economy is not well; on the contrary, low unemployment is a sign of a stable economy. Inflation is caused by excessive expansion of the money supply or government spending, according to the demand-pull theory.…
- 474 Words
- 2 Pages
Good Essays -
A key issue covered in several TCOs involves how firms in different market types make production decisions. Know how marginal analysis is used in imperfect markets (monopoly, monopolistic competition, and oligopoly) to make those choices when given info on fixed costs, variable costs, quantity and price. That is, what should the production level be at different price levels or different cost levels using marginal analysis.…
- 655 Words
- 3 Pages
Good Essays -
Cartel is a group of firm that collude by agreeing to restrict output to increase prices and profits. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers.…
- 389 Words
- 2 Pages
Good Essays -
Microeconomics: the study of the choices and actions of individual economic units such as households, firms, consumers, etc.…
- 613 Words
- 3 Pages
Good Essays -
The unemployment rate is the number of people without work in any given jurisdiction. It’s expressed as a percentage. The United States unemployment rate is around 8.2%, whereas the state of Georgia is approximately 8.9% (Harris, ECO/372, June 13, 2012). Comparing the unemployment rate of a country to the…
- 1126 Words
- 5 Pages
Better Essays -
The blunt reality is that our economic wants for exceed the productive capacity of our scarce (limited) resources. We are forced to make choices. This unyielding truth underlies the definition of economics, which is the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity (McConnell, Brue, & Flynn, 2012). Scarce economic resources mean limited goods and services. Scarcity restricts options and demands choices. Because we “can’t have it all’, we must decide what we will have and what we must forgo. At the care of economics is the idea that “there is no free lunch”. You may be treated to lunch, making it “free” from your perspective, but someone bears a cost.…
- 4682 Words
- 19 Pages
Better Essays -
Economics is the study of answering the scarcity problem. Everyone faces scarcity as no resources are infinite. Since no resources are infinite we must be efficient in allocating them. Every allocation has an oppertunity cost. If you produce microwaves you produce less computers. Since we can assume consumption provides utility, we must allocate the resources to yield the greatest utility. This is called allocative efficiency…
- 4008 Words
- 17 Pages
Good Essays