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ECON 104 - 1 - GDP sum of all final goods and services...

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GDP – sum of all final goods and services produced GNP – output produced by American-owned – no matter where located Nominal GDP – value of final output (current prices) Real GDP – value of final output (constant prices) Okun’s Law – 1% of unemployed results 2% les output Frictional – brief periods, moving between or into labor market Structural – mismatch between skills (location) and the requirements (location) Cyclical – lack of jobs Average Price – average price levels of output Relative Price – price of one good compared to other goods Causes of Inflation – excessive pressure on demand side Demand-pull – increase in price initiated by excessive aggregate demand Cost-push – Katrina, oil price^ = transportation and production price ^ Cost Of Living Adjustment - automatic adjustments of nominal income to the rate of inflation (protects real income from inflation) Adjustable Rate Morgage – a mortgage that adjusts the nominal interest rate to changing rates of inflation
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