Macroeconomics
10.1
Gross Domestic Product (GDP)
Output Expenditure Model
(C+I+G(X-M)=GDP)
Personal Consumption Expenditures:
Gross Investment:
Government Purchases
Net Exports (x-m)
Nominal GDP
Real GDP
Gross National Product (GNP)
10.2
Expansion Phase
Contraction Phase
Peak
Trough
Leading Indicator
Coincident Indicator
Lagging Indicator
10.3
Labor Productivity
Productivity Growth
Capital-to-labor ratio
Capital Deepening
11.1
Unemployment rate
Discouraged workers
Underemployed
Frictional unemployment
Structural unemployment
Seasonal unemployment
Cyclical unemployment
11.2
Aggregate supply
Aggregate demand
Inflation
Deflation
Demand-pull inflation
Cost-push inflation
Consumer Price Index (CPI)
Producer Price Index (PPI)
Inflation rate
hyperinflation
11.3
Poverty threshold
Poverty rate
Distribution of income
Income gap
Lorenz Curve
Gini Index
Focus Questions:
1. What are the main components of the GDP and how are they determined? (10.1)
2. How does the GDP differ from the GNP? (10.1)
3. What do economists use to predict the business cycle? Explain the characteristics of each indicator and use an
example. (10.2)
4. Describe the relationship between a nation’s economic growth and their standard of living. (10.3)
5. What changes result in economic growth? How is this growth measured? (10.3)
6. Does the unemployment rate represent an accurate depiction of how many people are actually out of work?
Explain your answer. (11.1)
7. What does it mean to have full employment? (11.1)
8. How is price level different from inflation and deflation? (11.2)
9. What are the two types of inflation? How are they different? (11.2)
10. Describe three programs that experts think would close the income gap. (11.3)