ch. 10 review - Hayley Glauben (1 ) Macroeconomics AP Ch....

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Hayley Glauben Macroeconomics AP Ch. 10 Review (1) Inflation: the rate at which average prices are rising Unemployment: the percentage of the labor force that is out of work Retail sales: total spending at stores The trade deficit: the imbalance of trade between the United States and the rest of the world Examples of Macroeconomics: o Inflation o Unemployment o Retail sales o Trade Deficit Macroeconomics: The study of the economy as a whole Goal of Macroeconomics: To explain the economic changes that affect many households, firms, and markets simultaneously Questions addressed in macroeconomics: o Why is average income high in some countries while it is low in others? o Why do prices sometimes rise rapidly while at other times they are more stable? o Why do production and employment expand in some years and contract in others? o What, if anything, can the government do to promote rapid growth in incomes, low inflation, and stable employment? GDP=Gross Domestic Product Two things GDP measures: o The total income of everyone in the economy o The total expenditure on the economy’s output of goods and services GDP is how to determine economic health For an economy as a whole, income must equal expenditure Circular-Flow Diagram: o Households get income when firms buy resources in market factor production o Expenditure and income are always the same no matter which way you look at it When exports are greater than imports, there is a greater GDP GDP: the market value of all final goods and services produced within a country in a given period of time
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This note was uploaded on 10/29/2010 for the course ECO 33815 taught by Professor Trejo during the Spring '10 term at University of Texas.

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ch. 10 review - Hayley Glauben (1 ) Macroeconomics AP Ch....

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