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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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.