100 200 300 400 500 3 goalsnaked economics unemploy ment misc. gdp 100 inflation 200 300 400 500
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3 Goals Naked Economics
Unemployment
Misc. GDP
100
Inflation
200
300
400
500
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IS
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Your
What are the 3 main Goals of Macroeconomics?
A 100
1. Full Employment (low unemployment)
2. Stable prices
3. Economic Growth
A 100
What are the “optimal” rates for the following:
1.Full employment
2.Stable Prices
3.Economic Growth
A 200
1. Full employment- 95-96% employed (4-5%
unemployed)
2. Stable Prices- 2% inflation
3. Economic Growth- 3.5% real GDP
A 200
This is the value of all final goods and services produced
inside a country’s borders within one year’s time.
A 300
Gross Domestic Product (GDP)
A 300
This is a sustained and continuous increase in the average of all prices over
time.
A 400
Inflation
A 400
List the 3 problems with using GDP to measure
economic growth.
A 500
1. It doesn’t measure non-market or illegal activities, like drug dealing
and babysitting
2. It doesn’t measure well-being and quality of life
3. Negative outcomes, such as economic depletion, are rewarded
A 500
B 100
$100 in $1 dollar bills is used to explain this
distinction in GDP
Real GDP adjusted for inflation instead of nominal
GDP
B 100
Most accurate comparative measure of economic wealth
India vs. Israel
B 200
Per Capita GDP
B 200
13 minutes
B 300
The time it takes to “earn” the value of a chicken today
B 300
GDP + Life expectancy + literacy + educational
attainment
B 400
Human Development Index created by UN
B 400
B 500
Country ranked 1st by Human Development Index
Norway
Next Australia and Iceland
US ranked 13
B 500
Total number of people employed or seeking
employment in a region
C 100
Labor Force
C 100
Workers who are moving between jobs, careers and
locations– Temporary Unemployment
C 200
Frictional Unemployment
C 200
Not enough demand to employ all those who want to
work
C 300
Cyclical Unemployment
C 300
DAILY DOUBLE
C 400
DAILY DOUBLE
Place A Wager
Workers have permanently lost their jobs in a certain
industry because the skills are obsolete
C 400
Structural Unemployment
C 400
Structural unemployment + Frictional Unemployment =
C 500
Natural Rate of Unemployment
C 500
Proportion of total non-institutionalized civilian
population 16 years of age and over in the civilian labor
force
D 100
Labor Force Participation Rate
D 100
Negative economic growth for a period of a least 6
months is this.
D 200
A Recession
D 200
Workers who “drop out” of the Labor Force
D 300
Discouraged Workers
D 300
3 Reasons for decline in Labor Force Participation
Rate
D 400
More people in jails, hospitals, treatment centers.
More people in military/gov jobs
Boomers retiring/teens entering college
D 400
Impact of Decrease in Labor Force on Productions
Possibilities Curve
D 500
Shift Left--
Inward
D 500
Tires sold to Big O vs. Tires Sold to Ford
E 100
Final vs. Intermediate Goods
Only Final Goods Produced– count in GDP
E 100
Upward slope in Business Cycle Graph
E 200
Expansionary Cycle
E 200
Lowest point in Business Cycle Graph
E 300
Trough
E 300
Downward slope in Business Cycle Graph
E 400
Contractionary Cycle
E 400
Real GDP = C+I+G+(X-M)
E 500
Real GDP = Consumption + Investment + Government Purchases + Net Exports
E 500
If Price Level is the Balloon, Inflation is the
F 100
The Flame
F 100
The Rate at Which Price Level Rises.
F200
Inflation
F 200
When the inflation rate rises at a rate that has been incorrectly forcasted
F300
Unanticipated Inflation
F300
Reasons debtors and governments running deficits ---win with a rise in unanticipated inflation
F 400
Dollars repaid over time are worth less in terms of purchasing power
F 400
Savers, Retirees, Creditors, Variable Rate Mortgage Holders, long term Bond Holders
F500
• Purchasing power is less than when money was first stashed away
• Banks lending money, that is worth more in 10 years than original contract amount
• Real rate of return is less
F500
Final Jeopardy
• Define Consumer Price Index and explain it’s uses
• CPI measures changes in the price level of consumer goods and services purchased by households.
• a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
• The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages, salaries, pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values.
