Unit 2- February 9

• Unemployment- the percentage of people who don't have jobs that are in the labor force
• Unemployment rate = #unemployment ➗#in labor force ✖ 100
• labor fore = Unemployment = employment
• standard unemployment is 4-5%
• people not in the labor force
• kids
• military personal
• people in mental institutions
• home makers
• retired people
• full-time students
• people in jail or prison
• discouraged
• 4 types of unemployment
• Frictional Unemployment
• "Temporarily Unemployment" or being between jobs
• individuals are qualified workers with transferable skills but they aren't working
• Seasonal Unemployment
• this is a specific type of frictional unemployment which si due to time of year and the nature of the job 
• these jobs will come back 
• Structural Unemployment
• Change in the structure of the labor force make some skills obsolete 
• Workers don't have transferable skills
• Cyclical Unemployment
• as demand for goods and services falls, demand for labor falls and workers are fired
• The natural rate and fall employment
• two of the three types of unemployment are unavailable 
• frictional
• structural
• Together they make up the natural rate of unemployment
• frictional + Structural = NRU (4-5%)
• full employment means no cyclical unemployment
• okun's law- when unemployment rises 1% above the natural rate, GDP fall by 2%
• People that are employed
• Part time workers
• people on a leave of absence
• people who work 1 hour a month
  

Unit 2- February 2

• Inflation- an increase or rise in price
• Purchasing power- the amount of goods and services that your money can buy
• three causes of inflation
• printing too much money
• demand-pull inflation
• it is caused by and excess of demand over output that pulls prices upward
• cost-push inflation- it is caused by a rise in per unit production cost due to increasing resources cost
• inflation rate formula- current year price index - base year price index ➗ base year price index ✖ 100
  
• Rule of 70- it is used to calculate the number of years it will take for the price level to double at any given rate of inflation
• 70 ➗ annual rate of inflation
• the ideal inflation rate should be 2-3%
• Deflation- a general decline in price level
• Disinflation- occurs when the inflation rate declines 
• Nominal interest rate- the unadjusted cost of borrowing a lending money
• Real interest rate- the cost of borrowing or tending, adjust for inflation
• Nominal - Expected inflation
• Hurt by inflation
• lenders-people who lend money (at a fixed interest rate )
• People with fixed income
• Savers
• Helped by inflation
• Borrowers- people who borrow money
• a buisness where the price of the product increases faster than the price of resources

Unit 2- February 3

• Nominal GDP- the value of output produced in current prices
• it can increase from year to year if either output or prize increases
  
• Real GDP- the value of output on constant base year prices
• it adjust for inflation
• it only increases if output increases
  
• formula is P * Q
• use real GDP to measure economic growth
• in the base year real GDP and Nominal GDP are equal
• in years after the base year nominal GDP will exced real GDP
• in years before the base year, real GDP will exceed nominal GDP
• GDP Deflator- a price index used to adjust from nominal to real GDP
• nominal GDP ➗ Real GDP ✕ 100
• in the base year GDP Deflator will always equal 100
• for years after the base year GDP deflator is greater than 100
• for years before the base year GDP deflator is less than 100
  
• Consumer price index( CPI )- it measures inflation by tracking changes in the price of a markets basket of goods
• Price of market basket in the current year ➗Price of market basket in the base year ✕ 100

Unit 2- January 31

• Expenditure approach to GDP
• expenditure is spending
• Income approach to GDP
• Wager rents interest profits + Statistical Adjustments
• Trade = Exports - Imports
• Budgets= government purchases of goods and services + government transfer payment - government tax and fee collection
• if the number is positive its a deficit, if its negative its a surplus
  

Unit 2- January 30

• GDP- Gross Domestic Product
• The total value of all final goods and services produced within a country's borders within a giving year 
• GNP- Gross national product
• The total value of all final goods and services produced by americans in a given year.
• GDP= C + Ig + Xn
  
• C- Consumption ( Includes the purchases of final goods and services)( 67% of economy)
• Ig-Gross Private Domestic Investment (18% of the economy) (Includes new factor equipment, factory equipment maintenance, construction of housing, unsold inventory of product build in a year)
• G- Government spending (17% of the economy) ( government purchasing goods and services)
• Xn- Net exports (exports - imports) ( -2% of the economy)
• Included in GDP
• C, Ig, G, Xn
• Excluded in GDP
• Intermediate goods
• adding double or multiple country
• Second hand goods 
• avoiding double or multiple counting
• Stock and Bonds
• no production involved 

Unit 2- January 26

• Circular flow model- it represents the trade of an economy by flows around the circle
  
  
  
  
  
• Household- a person or group of people who share an income
• Firm- An organization that produces goods and services for sale