Macroeconomics - ANSWER-Study of forces that influence the economy as a whole
Real GDP - ANSWER-Measures total income of everyone in the economy (adjusted for
the level of prices i.e. inflation)
Inflation Rate - ANSWER-Measures how fast prices are rising
Deflation Rate - ANSWER-Measures how fast prices are falling
Unemployment Rate - ANSWER-Measures the fraction of the labor force that is out of
work
Recession - ANSWER-Repeated periods of negative GDP growth
Depression - ANSWER-Long term recession
Models - ANSWER-Economists used theses to understand the world, examples: GDP,
Inflation, unemployment
Endogenous Variables - ANSWER-Variables that a model explains
Exogenous Variables - ANSWER-variables that a model takes as given
Market Clearing - ANSWER-the assumption that markets are normally in equilibrium, so
the price of any good or service is found where the supply and demand curves intersect
Flexible and Sticky Prices - ANSWER-Market Clearing Models assume all prices are
flexible(LR), in reality some wages and prices are sticky (SR)
Microeconomics - ANSWER-The study of how households and firms make decisions
and how these decision makers interact in the marketplace. The central principle of
microeconomics is that households and firms optimize.
Quantity Demanded Model - ANSWER-Qd = D(P,Y)
Quantity Supplied Model - ANSWER-Qs = S(P,Pm)
S() - ANSWER-Supply Function
D() - ANSWER-Demand Function
Equilibrium Model - ANSWER-Qs=Qd
Model of a Market - ANSWER-Demand, Supply, and Equilibrium Condition
GDP (Gross Domestic Product) - ANSWER-Considered the best measure of how well
the economy is performing, in the US this statistic is computed every 3 months by the
Bureau of Labor Analytics (BEA), a part of the US Dept of Commerce
Primary Sources of GDP Data used by BEA - ANSWER-Administrative Data, Statistical
Data
2 Views of GDP - ANSWER-Total Income and Total Expenditure
Stock - ANSWER-Quantity measured at a given point in time
, Flow - ANSWER-Quantity measured per unit of time
Value Added - ANSWER-Value of Output less the value of Intermediate goods
Imputed Value - ANSWER-Estimate of the value of a good or service that is not sold in
the marketplace and therefore does not have a market price
Nominal GDP - ANSWER-GDP measured in current prices and not adjusted for inflation
Real GDP - ANSWER-GDP adjusted for inflation
GDP Deflator - ANSWER-Nominal GDP / Real GDP
Nominal GDP - ANSWER-Real GDP x GDP Deflator
Real GDP - ANSWER-Nominal GDP / GDP Deflator
National Income Accounts Identity - ANSWER-Y = C + I + G + NX
Consumption (C) - ANSWER-Consists of household expenditures on goods and
services.
Goods - ANSWER-Tangible items
Durable Goods - ANSWER-Last a long time (Cars, TVs, Washing Machines)
Non durable Goods - ANSWER-Short life (Food and Clothing)
Services - ANSWER-Intangible items that consumers buy (haircuts, doctors visits, and
college educations)
Investment (I) - ANSWER-Items bought for future use
3 Subctegories of Investments - ANSWER-Business Fixed Investment, Residential
Fixed Investment, and Inventory Investment
Government Purchases (G) - ANSWER-the goods and services purchased by all levels
of government.
Net Exports (NX) - ANSWER-Accounts for trade with other countries, goods sold to
other countries (exports) less goods purchased from other countries (imports)
Gross National Product (GNP) - ANSWER-GNP = GDP + Factor Payments from
Abroad - Factor Payments to Abroad
Factor Payments - ANSWER-Wages, Profit, and Rent
GDP vs GNP - ANSWER-GDP measures income produced domestically while GNP
measures the total income earned by nationals
Net National Product (NNP) - ANSWER-NNP = GNP - Depreciation
National Income - ANSWER-NNP - Statistical Discrepancy
Personal Income - ANSWER-National Income - Indirect Business Taxes - Corporate
Profits - Social Insurance Contributions - Net Interest + Dividends + Government
Transfers to Individuals + Personal interest Income
Disposable Personal Income - ANSWER-Personal income - Personal Taxes
Consumer Price Index (CPI) - ANSWER-Bureau of Labor Statistics (BLS) computes the
CPI using the prices of thousands of goods and services
Alternative indexes of Prices - ANSWER-Producer Price Index, Core Inflation
CPI and GDP Deflator - ANSWER-CPI accounts for goods purchases by consumers,
GDP deflator accounts for goods produced, leaving Government and firm expenditure
out of CPI
Price Index with a fixed basket of goods - ANSWER-Laspeyres Index
Price index with Changing basket of Goods - ANSWER-Paasche Index
Personal Consumption Expenditures (PCE) - ANSWER-Reflects only Consumption
component of GDP
Real GDP - ANSWER-Measures total income of everyone in the economy (adjusted for
the level of prices i.e. inflation)
Inflation Rate - ANSWER-Measures how fast prices are rising
Deflation Rate - ANSWER-Measures how fast prices are falling
Unemployment Rate - ANSWER-Measures the fraction of the labor force that is out of
work
Recession - ANSWER-Repeated periods of negative GDP growth
Depression - ANSWER-Long term recession
Models - ANSWER-Economists used theses to understand the world, examples: GDP,
Inflation, unemployment
Endogenous Variables - ANSWER-Variables that a model explains
Exogenous Variables - ANSWER-variables that a model takes as given
Market Clearing - ANSWER-the assumption that markets are normally in equilibrium, so
the price of any good or service is found where the supply and demand curves intersect
Flexible and Sticky Prices - ANSWER-Market Clearing Models assume all prices are
flexible(LR), in reality some wages and prices are sticky (SR)
Microeconomics - ANSWER-The study of how households and firms make decisions
and how these decision makers interact in the marketplace. The central principle of
microeconomics is that households and firms optimize.
Quantity Demanded Model - ANSWER-Qd = D(P,Y)
Quantity Supplied Model - ANSWER-Qs = S(P,Pm)
S() - ANSWER-Supply Function
D() - ANSWER-Demand Function
Equilibrium Model - ANSWER-Qs=Qd
Model of a Market - ANSWER-Demand, Supply, and Equilibrium Condition
GDP (Gross Domestic Product) - ANSWER-Considered the best measure of how well
the economy is performing, in the US this statistic is computed every 3 months by the
Bureau of Labor Analytics (BEA), a part of the US Dept of Commerce
Primary Sources of GDP Data used by BEA - ANSWER-Administrative Data, Statistical
Data
2 Views of GDP - ANSWER-Total Income and Total Expenditure
Stock - ANSWER-Quantity measured at a given point in time
, Flow - ANSWER-Quantity measured per unit of time
Value Added - ANSWER-Value of Output less the value of Intermediate goods
Imputed Value - ANSWER-Estimate of the value of a good or service that is not sold in
the marketplace and therefore does not have a market price
Nominal GDP - ANSWER-GDP measured in current prices and not adjusted for inflation
Real GDP - ANSWER-GDP adjusted for inflation
GDP Deflator - ANSWER-Nominal GDP / Real GDP
Nominal GDP - ANSWER-Real GDP x GDP Deflator
Real GDP - ANSWER-Nominal GDP / GDP Deflator
National Income Accounts Identity - ANSWER-Y = C + I + G + NX
Consumption (C) - ANSWER-Consists of household expenditures on goods and
services.
Goods - ANSWER-Tangible items
Durable Goods - ANSWER-Last a long time (Cars, TVs, Washing Machines)
Non durable Goods - ANSWER-Short life (Food and Clothing)
Services - ANSWER-Intangible items that consumers buy (haircuts, doctors visits, and
college educations)
Investment (I) - ANSWER-Items bought for future use
3 Subctegories of Investments - ANSWER-Business Fixed Investment, Residential
Fixed Investment, and Inventory Investment
Government Purchases (G) - ANSWER-the goods and services purchased by all levels
of government.
Net Exports (NX) - ANSWER-Accounts for trade with other countries, goods sold to
other countries (exports) less goods purchased from other countries (imports)
Gross National Product (GNP) - ANSWER-GNP = GDP + Factor Payments from
Abroad - Factor Payments to Abroad
Factor Payments - ANSWER-Wages, Profit, and Rent
GDP vs GNP - ANSWER-GDP measures income produced domestically while GNP
measures the total income earned by nationals
Net National Product (NNP) - ANSWER-NNP = GNP - Depreciation
National Income - ANSWER-NNP - Statistical Discrepancy
Personal Income - ANSWER-National Income - Indirect Business Taxes - Corporate
Profits - Social Insurance Contributions - Net Interest + Dividends + Government
Transfers to Individuals + Personal interest Income
Disposable Personal Income - ANSWER-Personal income - Personal Taxes
Consumer Price Index (CPI) - ANSWER-Bureau of Labor Statistics (BLS) computes the
CPI using the prices of thousands of goods and services
Alternative indexes of Prices - ANSWER-Producer Price Index, Core Inflation
CPI and GDP Deflator - ANSWER-CPI accounts for goods purchases by consumers,
GDP deflator accounts for goods produced, leaving Government and firm expenditure
out of CPI
Price Index with a fixed basket of goods - ANSWER-Laspeyres Index
Price index with Changing basket of Goods - ANSWER-Paasche Index
Personal Consumption Expenditures (PCE) - ANSWER-Reflects only Consumption
component of GDP
