EXAM COMPLETE STUDY GUIDE PRACTICE
QUESTIONS AND REVIEW NOTES
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, GDP Components C: consumption
I: investment
G: government spending
NX: net exports
real vs. nominal GDP real GDP accounts for changes in the price level while nominal GDP does not
GDP per capita & GDP growth
problems with GDP fails to account for non market goods, unreported economic activity,
environmental quality/leisure time/political freedom
unemployment rate proportion of the labor force who do not have a job and have not looked for one
within the past four weeks
who doesn't count as part of the labor force discouraged workers, stay at home parents, students without a job, etc
problems with the unemployment rate doesn't account for discouraged workers and involuntary part-time workers
types/causes of unemployment structural, frictional, and cyclical
-will always have structural/frictional unemployment, even when the economy is
good
frictional unemployment due to "normal" labor market turnover
-takes time to find a job after entering labor force
things that affect frictional unemployment -the internet or other informational things that reduce search costs
-unemployment benefits: may reduce the incentive to look for a job/make you
less likely to accept a low-paying job
-rate at which people enter labor force