Exam 1 Notes

Exam 1 Notes - Macro Review Short-Run A period of time...

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Macro Review: Short-Run – A period of time during which at least one input is fixed. Long-Run – A period of time during which all inputs are variable. Unemployment Rate = (# of unemployed)/(# in labor force) Labor Force – Over age 16, not in military, employed, or actively seeking employment. Types of Unemployment: Frictional – Out of work b/c they are Δing jobs or searching for 1 st job. Cyclical – Joblessness caused by a reduction in the economy’s total D. Structural – Δs in the makeup, or structure of, the economy that render certain skills obsolete. Natural Rate of Unemployment = Frictional + Structural … (not cyclical) Inflation – A rise in the general level of prices. Winners = Borrowers, Homeowners; Losers = Savers, Lenders, Fixed Incomers Price Index = (P in any given period)/(P in the base period) Annual Inflation Rate = (PI y2 -PI y1 )/(PI y1 ) Measures – Consumer Price Index (CPI), Producer Price Index (PPI), Implicit Price Deflator (IPD) GDP – The market value of all final goods and services produced in an economy in a specific time period. GDP = C+I+G+Nx where C = Consumer Spending (Durable/Non-Durable goods, Services) G = Government Spending as defined by cost of provision (not transfer payments) Nx = Net Exports (exports less imports) Economic growth is measured by GDP. Target rate is 3% defined by the “Rule of 72.” GNP – The market value of all final goods and services produced by a country’s residents in a specific time period. NFFI – Income earned by domestic residents abroad minus income earned by foreign residents domestically GDP = GNP – NFFI Definitions: Security – A claim on the issuer’s future incomer or assets. Bond – A debt security that promises to make payments periodically for specified period of time.
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This note was uploaded on 04/27/2011 for the course ECON 301 taught by Professor Lowe during the Spring '10 term at Boise State.

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Exam 1 Notes - Macro Review Short-Run A period of time...

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