Term
| Define fully Gross Domestic Product (GDP). Be sure to include all of the elements. |
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Definition
| a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 |
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Term
| What are the various types of unemployment? Hint, there are four of them. |
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Definition
| structural, frictional, cyclical, and seasonal |
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Term
| What is the difference between real and nominal values? |
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Definition
| Values for real GDP are adjusted for differences in prices levels, while figures for nominal GDP are not. The GDP deflator is an economic metric that converts output measured at current prices into constant-dollar GDP. |
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Term
| What is the business cycle? Be sure to discus each phase. |
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Definition
| fluctuations in econnomic activity, such as employment and production. expansion, peak, recession, depression, trough, recovery. |
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Term
| How does inflation impact interest rates? |
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Definition
| consumers have more money to spend, causing the economy to grow and inflation to increase. The opposite holds true for rising interest rates. As interest rates are increased, consumers tend to have less money to spend. With less spending, the economy slows and inflation decreases. |
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Term
| GDP can be expressed as follows: GDP=Y=C+I+G+X. What are these elements of GDP? |
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Definition
| GDP(Y)= Concumption(C) + Investments(I) + Government purchases(G) + net exports (X) |
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Term
| What is the fundamental economic problem that faces all of society and how does it relate to the study of economics? |
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Definition
| there is scarcity; that is, that the infinite resources available are insufficient to satisfy all human wants and needs. |
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Term
| Explain the demand curve. What are the other factors which influence demand? |
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Definition
| The demand curve is a graph of the relationship between the price of a good and the quantity demanded. The factors which influence demand are: the price of the product, the consumers income, The price of related goods, the taste and preferences of consumers, the consumers expectations, the number of consumers in the market. |
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Term
| What is the difference between a movement and a shift in either the supply or demand curve? |
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Definition
| factors that shift the demand curve: Changes in the prices of related goods, changes in income, changes in tastes, changes in expectations, changes in the number of consumers. Factors that shift the supply curve: a change in the quantity supplied of a good that is the result of a change in that good's price. |
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Term
| What are the three questions every economic system must answer? What is the difference between a pure market economy and pure command economy? |
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Definition
| Who, what, and how. Market economies and command economies occupy two polar extremes in the organization of economic activity. The primary differences lie in division of labor or factors of production and the mechanisms that determine prices. The activity in a market economy is unplanned; it is not organized by any central authority and is determined by the supply and demand of goods and services. Alternatively, a command economy is organized by government officials who also own and direct the factors of production. |
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Term
| What is market equilibrium? What role do prices play in bringing a market to equilibrium? |
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Definition
| a market state where the supply in the market is equal to the demand in the market. The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it in the market. |
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