202.T&C.2

202.T&C.2 - Econ 202: Macroeconomics Terms and Concepts...

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Econ 202: Macroeconomics Terms and Concepts from the second week of class Three methods of calculating Gross Domestic Product : Expenditures Method - starts with the value of final goods and services, and subtracts down to get the other national income accounts Incomes Method - starts by summing factor shares to get National Income, adds in Indirect Business Tax and Capital Consumption Allowance to get to Net Domestic Product and Gross Domestic Product, respectively; then subtracts down to get the other accounts. Useful for distributional analysis Value Added Method - sums the market value added at each stage of the production process, from raw materials to finished product. Useful for economies that use the value added tax. All three methods give the same result, they differ only in the way the information is organized. Unemployment : Civilian Labor Force - Members of the economy who: have attained 16 years of age are not in the armed forces have full-time or part-time employment are receiving unemployment compensation or have notified their state unemployment agency within the last six months that they are seeking work In order to be counted as unemployed, you must be a member of the Civilian Labor Force. Who is not counted: • people engaged in non-market work • discouraged workers - those who have given up looking for work even though they want a job • people in the armed forces are counted separately, not as employed civilians Unemployment rate = [# of unemployed] ÷ [Civilian Labor Force] Unemployment rate expressed as a percentage: [# of unemployed] ÷ [Civilian Labor Force] x
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202.T&C.2 - Econ 202: Macroeconomics Terms and Concepts...

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