JEOPARDY!
Labor
(No)
Math!
Jobs…
Alex
Trabeconomics
GDP and the
flow of
spending and
income.
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Inflation
A sustained increase in the
general price level
INFLATION
A collection of goods and
services from which prices are
measured to compute inflation
Market Basket
A number that has not been
adjusted for inflation
Nominal
Inflation tends to transfer value
from __________ to _________
Lenders to Borrowers
DAILY DOUBLE!
(From the reading): The most
commonly used price index is the
CPI. Some economists prefer the
________ as it includes a far
larger market basket than the CPI
– nearly all goods and services
available in the economy.
GDP Deflator
He wrote The General Theory of
Employment, Interest, and
Money in 1936. His economic
ideas changed the way
governments managed their
economies.
JOHN MAYNARD KEYNES
A period of time when domestic
output declines
RECESSION
It includes all working people
plus all people over 16 who are
actively looking for jobs.
Labor Force
A person who does not have a job
who is actively looking for one.
Unemployed
A stay at home mom or a retired
person would both be an example
of this.
Civilian outside the labor force.
The likely effect of an increase in
unemployment compensation.
Natural Rate of Unemployment
Rises
Unemployment which is
attributable to a decline in the
economy’s total production
CYCLICAL
UNEMPLOYMENT
Unemployment that is due to
people being “between jobs”
FRICTIONAL
UNEMPLOYMENT
John has been replaced at work
by a machine. John is the victim
of what kind of unemployment?
STRUCTURAL
UNEMPLOYMENT
An unemployed person who has
given up looking for work
DISCOURAGED WORKER
“Full employment” allows for
these two types of unemployment
to exist.
STRUCTURAL AND
FRICTIONAL
National Income may be found
by determining the sum of all
types of spending. What are the
variables in this sum?
C+I+G+(X-IM)
The minimum wage in 1994 was
$4.25. The CPI in 1994 was
148.2. Compute the real
minimum wage in 1994. Just
showing your math is fine….
$2.87
DAILY DOUBLE!
In May many new college
graduates enter the workforce.
What should happen to the
unemployment rate every May ?
It will increase
Assume that the unemployment
begins the summer at 8%. During
July and August one hundred
thousand people enter the
workforce while only ninety two
thousand jobs are created. What
happens to the unemployment
rate?
It stays the same.
Assume that the current inflation rate
is 3% when you take out a loan for
which you must pay 7% interest.
What is the real rate of interest?
4%
The type of market in which
households sell labor and other
factors of production to
businesses.
Factor Market
This is calculated by pricing
several hundred items in a market
basket and is used to compare
real price levels.
CPI – an index number
A good used for resale or for the
use in producing another good
(Hint: NOT counted in the GDP)
INTERMEDIATE GOOD
The sum of the expenditures of
business firms on new plant and
equipments and households on
new homes.
INVESTMENT SPENDING (I)
This type of person often gains
from inflation
BORROWER
The sum of the incomes of all the
individuals in the economy after
taxes and transfer payments
DISPOSABLE INCOME
Sums of money that the
government gives certain
individuals as outright grants.
TRANSFER PAYMENTS
Shows the relationship between
total consumption and total
disposable income
CONSUMPTION FUNCTION
The ratio (shown as slope) of
changes in consumption relative
to changes in disposable income.
MARGINAL PROPENSITY TO
CONSUME
The volume of goods and
services that a given sum of
money will buy.
PURCHASING POWER
• Brittany Spears won a
Grammy Award for
this single/type of
unemployment
resulting from not
enough demand.
Tox-Cyclical
• A number computed
to measure
inflation/He hosted
MTV’s “Pimp My
Ride”
IndeXzibit
• A general rise in
prices/He founded
Napster and was an
early Facebook
investor – and was
portrayed by Justin
Timberlake in “The
Social Network”.
Infla-Sean Parker
• Someone who has
given up looking for a
job/this Muppet was
the on-location
reporter for Muppet
newscasts.
Discouraged Wor-Kermit the
Frog
• The dollar value of all
final goods and
services produced
within a country’s
borders in a year/He is
the lead guitarist for
The Who
GD-Peter Townshend