AP MACRO UNIT 2

the pattern in which goods, services and resources flow in the marketplace

the total market value of all final NEW goods and services produced annually in an economy

GDP measured in current prices

• Nonmarket Activities

• Underground Economy

• Negative externalities

• Quality of life

the total number of workers, including both the employed and the unemployed

the percentage of the labor force that is unemployed

the percentage of the adult population that is in the labor force

frictional structural cyclical

*A type of unemployment caused by workers voluntarily changing jobs and temporary layoffs *unemployed workers between jobs.

*unemployment resulting from industrial reorganization, *typically caused by technological change

does not give a good indication of how many people are discouraged(not looking for work) or underemployed.

frictional plus structural unemployment *typically 5- 7%

unemployed/labor force x 100

employed + unemployed

labor force/adult population x 100

a measure of the overall cost of the goods and services bought by a typical consumer

A general increase in prices

A situation in which prices are declining

a reduction in the rate of inflation

variables measured in physical units

CPI this year - CPI last year / CPI last year x 100

*Does not factor in change in quality or substitutes

(cost of basket in current year/cost of basket in base year) x 100

Nominal GDP/GDP Deflator x 100

C+I+G+(X-M)

Nominal GDP/Real GDP x 100

1. Intermediate goods

2. Household production

3. Non-market (illegal) activities

4. Used goods and services

real GDP divided by the total population

1)Savings 2)Imports

expansion-> peak-> contraction-> trough->recovery

a period of macroeconomic expansion followed by a period of contraction

when aggregate output is below potential output

when aggregate output is above potential output