CHEAT SHEET - industrial RECESSIONS Slowdowns in economic...

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- RECESSIONS: Slowdowns in economic growth (usually negative two quarters) - DEPRESSIONS: Severe recessions - EXPANSIONS: Periods of rapid economic growth - BUSINESS CYCLE: A recession ends at a trough, starts at a peak. An expansion ends at a peak, starts at a trough. - UNEMPLOYMENT RATE: Fraction of LABOR FORCE (unemployed + employed) searching, can’t find work, or who are temp. out of work but expect to return shortly. - TRADE DEFICIT: Exists when imports are larger than exports - TRADE SURPLUS: Exists when exports are larger than imports - MONETARY POLICY: Determination of nation’s money supply (changes in money supply affected) - FISCAL POLICY: Determines government budget: expenditures + revenues of the gov. Deficit: Gov Spends > Collected in Taxes, Surplus: Gov Spends < Taxes - STRUCTURAL POLICY: Gov. policy aimed at changing the underlying structure/institutions of nations econ. Ex: Privatization of gov. owned industrial - POSITIVE ANALYSIS (What Is): testable, addresses the economic consequences of a particular event of policy - NORMATIVE ANALYSIS (What Ought To Be): what should be, judges whether consequences are desirable. - 3 BIG ISSUES: standard of living, cost of living, economic fluctuations, recessions/expansions - AGGREGATION: the adding up of individual economic variables to obtain economy-wide totals Ex. Inflation rate, unemployment rate, GDP - INFLATION RATE: rising cost of living, rate at which prices are increasing over time (excludes good and energy) - STANDARD OF LIVING: the degree to which people of access to goods and services that make their lives easier (MEASURED IN OUTPUT PER PERSON) - AVG. LABOR PRODUCTIVITY = TOTAL OUTPUT/# OF PEOPLE EMPLOYED (OUTPUT PER WORKER) - - GDP: The market value of the final goods and services produces in a country during a given period - Market Value: a convenient way to add together many different goods. Pitfalls are created if counted even if it doesn’t go through market. - If INTERMEDIATE GOOD is not currently produced it must be subtracted to avoid DOUBLE COUNTING. Intermediate goods are indirectly counted in final goods. -
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This note was uploaded on 02/01/2011 for the course EC 202 taught by Professor Obst during the Spring '08 term at Michigan State University.

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CHEAT SHEET - industrial RECESSIONS Slowdowns in economic...

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