This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 1-14-08 Chapter 4-1 1. great depression a. (1929-1939) of increase in unemployment and stagnant production b. Negative inflation. Influenced world c. Reason how economic system started (start of government intervention) d. Recession i. Slow down in spending ii. Government should get involved 2. unemployment rate a. % of the labor force (who are willing and able to work) that are not employed b. WWII ended the great depression c. It cannot go negative persistent 3. countries that are close tend to have similar economic system 4. economic growth a. expansion of production possibilities result from capital accumulation and tech. change b. want to make more with same resource c. can raise living standard 5. fact that business has freedom gives the GDP to fluctuate a lot (poor investment could cause things to change) a. ex. Housing, lender crashed the market 6. industrial countries (USA and Japan)grows slower than developing countries (India and China) 7. Potential GDP (it’s goal for economist) a. Value of output when all the economy’s factors of production are fully employed b. PPF c. Using full resources d. War and expansion boost up or pass potential GDP (work much more intense, labor and other used more than normally) but recession decreases 8. business cycle a. periodic but irregular increase and decrease movement in production 9. expansion a. real GDP increase, cycle phase with trough (low) and peak 10. recession a. real GDP decrease at least 2 quarters 11. output gap a. real GDP minus potential GDP b. Okun Gap = output gap 12. productivity growth slowdown a. A situation in which the growth rate of output per person slows. 13. Lucas wedge a. how much GDP stayed as supposed to b. $72 trillion for US 14. fiscal policy a. Gov. attempt to achieve macroeconomic objectives by setting and changing tax rates, making transfer payment, and purchasing goods and services. ...
View Full Document