Download Topic 7: Lesson 1: Gross Domestic Product Definition

Topic 7: Lesson 1: Gross Domestic Product
Definition- ______________________of all _____________________________________produced
within a country’s borders in a given year.
Dollar value-____________________________________________________________________
Final goods and services-__________________________________________________________
2 ways to calculate:

Expenditure-_____________________________________________________________
o
EX:

Income- ________________________________________________________________
o
EX:
Nominal GDP-__________________________________________________________
Real GDP-_______________________________________________________________
Gross National Product-____________________________________________________
o ______+_________________________________________________________
______________________________________________________________.
Limitations of GDP
1.
___________________________________________________________
2.
___________________________________________________________
3.
___________________________________________________________
4.
___________________________________________________________
Factors that Affect GDP:
1. _________________________________:
The ___________________of goods and services available at ___________________ in the economy
2. ____________________________________:
The ______________________________ of goods and services that will be __________________
at all possible price levels.
3. ______________________________:
The _______________________ of __________________________ in the economy.
Lesson 2: Business Cycles:
What drives Business Cycles?
1.________________________________________________________________
2. ________________________________________________________________
3. ________________________________________________________________
4. ________________________________________________________________
o Economic Activity in the U.S. has followed a _____________________________.
o Periods of GDP ________________________ alternate with periods of GDP ________________.
o The _________________________________: deepest and longest-lasting economic
________________.
o The __________________________________: a ______________________________________
economic downturn that began in 2008.
o It was caused by the ________________________________ of 2008.
o Causes of the Great depression:
o ______________________ in the __________________________ of income
o Easy and ____________________________________
o Global economic conditions
o High American _________________________ on imported goods
 _______________ Market _________________ in 1929
 AKA: _______________________________
 Between 1929-1933 GDP ___________________ from $103 to
____________________- a 50% _____________________.
 ______________________ rose over 800%
 Government declared a __________________________ in march 1933
o Causes of the Great Recession:
o The banks created _______________________________:
 Banks created huge sums of new money by ______________________________
 In 7 years the amount of money and debt ___________________.
o Housing prices were pushed and there was increased ______________________.
 Interest on personal debt was unpayable and individuals could not repay loans
o Afterwards Banks _____________________ to ________________ and the economy shrank:
o The U.S. _____________________________ lost ______________________________, or 6.1%
of all payroll employment
 16 months after the end, the economy still had _____________________________ than
before the recession started
 At the end of the recession __________________________ was __________________
o Over ______________ of U.S. households experiences a _____________ in ______________.
o Banks reduced their ______________________________ by $12.5 billion,
 The two biggest small-business menders, Wells Fargo and Bank of America,
______________ their lending to small-business by ________% and ________%

Expansion-____________________________________________________________________
Peak-_________________________________________________________________________
Contraction-___________________________________________________________________
Trough-_______________________________________________________________________
Lesson 3: Economic Growth
1. Economic Growth is measured: ___________________________________________
_______________________________________________________________________
2.
3.
4.
5.
6.
7.
8.
9.
 _______________ growing = economic ________________
____________________ of ____________________ is better
___________________ growth doesn’t necessarily mean economic growth
_____________________ process: ________________ in _____________________.
 Gained by _________________ ________________ output without using more input
_______ ___________________: For each person
___________ _____________ per capita: Real GDP for each individual
Capital Deepening: The process of ____________________ the amount of _____________ per
_________________.
More physical capital= each worker can be more ______________________, producing more output
per __________________ of work.
Economists use the term __________________ _____________________ to describe the
_________________________ of ______________________ produced per worker.
Lesson 4: Unemployment Notes
1.
2.
3.
4.
5.
6.
Unemployment is the percentage of labor force unemployed
_____________ _________________- people who are able and willing to work.
_____________________= unemployment/labor force x 100
____________ ____________________ workers are included in percentage.
_____________________________ workers are not included.
Under-employed: people who ____________ jobs that are __________________ their
________________.
 Ex: __________________________________________________________
7. The unemployment rate may __________________ but be _________________.
 Workers become ________________________ and quit looking.
8. Amount of unemployment is an important clue to the _________________ of the
________________.
The 3 Types of Unemployment
1. __________________- temporary, transitional, short term.
Examples:



People who get ________________ or ____________ to look for better employment.
_______________________ from high school or college who are looking for a job.
___________________ or weather-dependent jobs such as _______________, construction,
retail, or __________________.
 Signals the ______________ ________________ are available and reflects _______________ of
_________________. These are qualified workers with transferable skills.
2. _________________- technological or long term.
Examples:

___________________ do not match up with what is needed, and workers are
___________________ by a computer.
 _____________________________ may result in job losses.
 Consumer ______________ may make a good ________________________.
 These jobs do not come back.
 _______- ___________________________ skills- choice is ___________________
unemployment or retraining.
3. ___________________: caused by economic ______________________.
 When we are in a ______________________, people get laid off.
 _________________ ____________________ jobs are impacted the most.
 Cyclical unemployment is _________________ _____________________.
 These jobs do ________________ ________________.
4. Economists say economy is ___________________ _____________________ when it is
experiencing only _____________________ and _____________________ unemployment.
5. Natural Rate of unemployment: ________________ %
6. Is there a ____________________ ____________________ to __________________
unemployment?
7. _____________ rates move with the ___________________ ______________.
 ______________________ during periods of ___________ unemployment and
________________ during periods of _________ unemployment.
Lesson 5 Inflation and Deflation
1.
2.
3.
4.
5.
6.
7.
8.
The general _____________________ in prices.
_____________________ __________________- ability to purchase goods and services.
________________________- inflation that’s out of control.
__________________ ________________- measurement that shows how the __________________
______________ of a standard group of goods changes over time.
 Compare earlier prices of the same goods to see how much prices have ________________
____________________ ____________________.
_____________________ Price Index- determined by measuring the price of a
________________________ _________________________ of goods meant to
__________________ the market basket of a ______________________ urban consumer.
_____________________ ___________________- representative collection of goods and services
(updated every _____________ _______________)
 Example: Food, drinks, housing, transportation, entertainment.
CPI shortcomings:
 _________________________ NOT counted
 _________________________ NOT considered
 No discount/warehouse stores
 _____________ _____________________ NOT counted.
_________________ __________________- the ___________________ rate of the changes in the
price level over time.
9. Causes of inflation:
 Growth of the _________________ ___________________.
 Changes in Aggregate _________________________.
 Changes in _______________________ supply.
_________________
- Pull
Too much spending chasing too few goods
Changes in price level caused by an
________________ of ______________
__________________ beyond economy’s
__________________ to produce.
Will continue as long as there is excess total
spending
_____________________ - Push
Inflation on __________________, or cost side
of economy
Output and employment do _______________,
price level _____________________.
Explains rising prices in terms of
_______________________ that raise
____________-_________________
_____________________ costs at each
_________________ of spending.
Cost-push inflation will die by itself.
10. Too much money in the _______________ _________________ can cause inflation.
 Most economists agree that the money supply should __________________ at the same rate the
economy is ______________.
11. Inflation can lead to a ____________________-_________________ _____________________ of
increasing prices.
12. Anticipated inflation:
 Lenders can charge _____________________ ___________________.
 ARMs- ____________________ _______________ ________________.
13. Trends in Inflation:
 Americans under 30 have experienced ___________ ___________________ __________ for
most of their lifetimes.
 In the late 1990s, unemployment levels were ____________.
o Typically, low unemployment leads to _________________ ______________ because
companies compete for scarce workers by offering __________________
______________________.
 Rising wages can ________________ the inflation rate up.
Lesson 6: Poverty and Income Distribution
1. What causes Poverty?”
 Changes in _________________ structure.
 Where people live
 Unequal Treatment
 _______________ -____________________ Service Jobs
 Lack of __________________________.
2. Income Distribution: ______________________ with which income is dealt out among members of
a _____________________.
3. Differences in Income: differences in the _________________ _____________ among individuals
in a society.
4. ______________________: any of five equal groups into which a population can be
______________________ according to the _________________________ of values of a particular
___________________.
 Examples: the variable can be income, net worth, household size etc.
5. Equity:
 The government spends ___________________ on programs designed to
_____________________ poverty.
o This money is spent on cash ______________________, education,
___________________ benefits, and non-cash benefits such as
______________________ _____________________ and subsidized
____________________.
 The stated goal of these programs is not to provide equal distribution of wealth.
o The goal is to ensure a _________________ ___________________ of
___________________ for all and to provide the poor and __________________ to
___________________________ their condition.
6. Programs:
 The ______________________ ______________________ ______________
_________________: tax credit for low-to moderate income ________________________
individuals and couples, particularly those with children.
 ____________________ _____________________: an _____________________ area in which
incentives such as _______________ _______________________ are offered to encourage
business ___________________ and provide jobs for the residents.
 Job Training
 Affordable Housing
 Welfare to Workforce
 Addressing Poverty
 In-Kind ___________________: exchange of goods or services for other goods or services with
no __________________ of __________________.
 Education Programs.