Economics study guide - What is output It is the total...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
What is output? It is the total value of goods and services produced (Y). What is the unemployment rate? % of people who want a job but don’t have one (UR). What is inflation? Growth rate of the price level ( ). How are Presidential elections decided by the state of the macroeconomy? - 1932 Presidential election – incumbent Herbert Hoover looses to challenger Franklin Roosevelt. o Great Depression 1929 – stock market crash, failures of banks o Between 1929-1932 Y fell in real terms by 33% UR rose from 3% to 25% Deflation (from default mortgages) fell by 23% - 1976 Presidential election – Incumbent Gerald Ford looses to challenger Jimmy Carter o 1970s – 1973 price of oil jumps dramatically (OPEC reduce Y) stagflation (inflation+stagnation, declining economy or recession where real output declines for 2 sessions with increasing prices) Y fell in 1974 and 1975 (recession) UR rose to 8.5% by 1975 rose to about 9% by 1975 o “Misery index” = UR + second highest ever - 1980 Presidential election – Incumbent Carter looses to challenger Ronald Reagan “Are you better off?” slogan o 1979 second dramatic jump in oil prices more stagflation Y fell by 1980 UR rose to over 7% in 1980 rose to 10% - 1992 Presidential election – Incumbent G.H.W Bush looses to challenger Bill Clinton o 1992 Economy in recession Y fell in 1991; stagnant in 1992 UR over 7% in 1991+1992 not a problem, about 3% - 2004 Bush vs. Kerry Y grew slowly 2000-2003: but grew over 4% in 2004 UR rose to 6% in 2003: but fell to 5.5% in 2004 about 2-3%, not an issue - Current economy:
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Y growth rate of real GDP: 3 rd quarter 2008 = -.05% (rose in 1 st Q, 2 nd Q) Consensus forecast: real GDP fell 5.5% in 4 th Q UR: Dec. 2007=5%, jumps from 5-5.5% in May 2008 keeps rising, Dec. 2008=7.2% (kept by bureau of labor statistics) : -1% Oct. 2008, -1.7% Nov., -0.7% Dec. } skewed by gases -0.1% Oct., 0 Nov. Dec. } excludes food and energy Output (Y): How is it measured? To allow for meaningful comparisons over time and across countries Most common measure – Gross Domestic Product (GDP) - Nominal GDP – Market value, at current prices, of all domestically produced final goods and services produced this period (sum of PxQ) o Alternative way of constructing NGDP = sum of Value Added (VA) of all transactions final+intermediate 1. Only NEWLY produced included, not used to avoid double-counting 2. Only domestic output, not foreign (value of imports not included) 3. Only final, not intermediate (final – sold to its end user, intermediate – used in production of another good) What are the 4 categories of Final Transactions? C + I + G + (X-M) NX=net exports=Exports-imports (X-M) 1. Consumption (C) – almost anything you and I spend on 2. Investment (I) – refers only to purchases of tangible (durable), physical capital assets (business plant and equipment, new home), does not include paper assets like stocks and bonds 3. Government (G) – Government purchases of good and services (state, local, federal), roads, schools, bureaucracy. Does not include all spending, excludes transfer payments (SS) 4. Export (X) – some U.S. output sold abroad wont show in C, I, G
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern