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Supply
Key Economic
Assumptions
Flow
Model
GDP
Unemployment
Demand
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- $100
Temporarily unemployed or being between jobs such as
individuals that are qualified workers with transferrable
skills
What is frictional unemployment?
- $200
Changes in the structure of labor force and therefore
makes some skill obsolete.
What is structural unmployment?
- $300
Unemployment that results from economic
downturns such as recessions.
What is cyclical unemployment?
- $400
Is formed by Frictional unemployment and structural
unemployment
What is the natural rate of unemployment?
- $500
Unemployment from 4 to 6 percent is normal
unemployment
What is full unemployment?
- $100
The place where goods and services produced by
businesses are sold to households
What is the product market?
- $200
The place where resources, land, labor capital
Your text ability sold to businesses
and entrepreneurship
here
What is resource factor market?
- $300
Goods that are designed for use by final consumer
What are consumer goods?
- $400
The inputs of labor, natural resources and capital
used to generate new goods and services
What is productive resources?b
- $500
Household spending on goods and services
What is consumer spending?
- $100
The study of scarcity and choice
What is economics?
- $200
Rewards or punishments that motivate particular
choices
What are incentives?
- $300
Focuses on the choice of individuals at the most basic
level
What is microeconomics?
- $400
The overall ups and downs of the economy
overall
What is a macroeconomics?
- $500
An industry that is publicly owned and has a central
authority making production and consumption
decisions.
What is command economy?
- $100
The dollar value of all final goods and services produced
within a country's borders in one year
What is GDP?
- $200
Goods and services bought from one firm by
another firm to be used as inputs into the production
of final goods and services
What are intermediate goods and services?
- $300
Spending on a new productive physical capital,
such as machinery and structures, and on changes in
inventories
What is investment spending?
- $400
The difference between the value of exports and the value
of imports
What are net exports?
- $500
The total spending on domestically produced final
goods and services in the economy
What is a aggregate spending?
- $100
Changes in price of related goods or services, income,
taxes, expectations and number of consumers.
What are shifts in demand curve?
- $200
Holds and inverse relationship as price rises.
What is demand?
- $300
A higher prices for goods or sevices all other things
being equal leads to people to demand a smaller
quantity of that goods and services
What is the law of demand?
- $400
Changes in input prices, in the price of related goods or
services , changes in technology, expectations and number
of producers.
What are changes in supply curve?
- $500
Other things being equal, the price and quantity
supplied of a good are positively related
What is the law of supply?
- $100
The sum of the employed and the unemployed
What is the labor force?
- $200
The nominal interest rate minus the rate of inflation
What is the real interest rate?
- $300
The percent change per year in a price index,
typically the consumer price index
What is inflation rate?
- $400
Arise from the way the inflation makes money a less
reliable unit of measurement
What is the unit of accounts cost?
- $500
A hypothetical set of consumer purchases of goods and
services
What is market basket?