Gretel's AP Macroeconomics Blog

Unemployment Population -the number of people in a country Labor force -the number of people in a country that are classified as either employed or unemployed People who are employed...: are able and willing to work must be 16 years old or older must work at least one hour every two weeks                                                                                                                                                            People who are unemployed : are people who are 16 years of age or older that don't have a job Unemployment -the failure to use available resources Underemployment -is when you have the resources but aren't using them efficiently the formula to find unemployment rate is: # of unemployed/total labor force x 100 t otal labor force = # of employed + # of unemployed t he ideal unemployment rate is between 4-5% The people who aren't in the labor force are...

Inflation - a general rise in the price level - ex: an increase in gas prices in the same day Deflation -a general decline in the price level -ex: a decrease in gas prices in the same day Disinflation -is when the inflation rate itself declines -ex: gas prices staying the same throughout the week Real interest rate -the cost of borrowing money that is adjusted for inflation -the formula is: real interest rate = nominal interest rate - expected inflation rate Nominal interest rate   -the unadjusted cost of borrowing money -the formula is: nominal interest rate = real interest rate + expected inflation rate Demand-pull inflation   -is caused by an increase of the demand output that pulls the price upward -it's triggered by an increase in the total demand, which causes output and employment to rise, which also causes the price level to rise Cost-push inflation -an increase in the cost of factors of pr

Gross domestic product ( GDP) -the total market value of all final goods and services produced within a country's borders within a given year Gross national product ( GNP) -a measure of what citizens produce and whether they produce these items within a country's borders There are four sections of GDP, to find the GDP, use this equation: GDP = C + I g + G + X n " C " stands for personal consumption expenditures , which are finished goods or services. More than half of the economy is spent on this part " I g " stands for gross private domestic investment , less than 20% of the economy is spent on this part. There are four categories in this segment: factory equipment maintenance new factory equipment construction of housing unsold inventories or products built in a year " G " stands for government purchases of goods and services . 20% of the economy is spent on this section. " X n " stands for net export

Circular Flow Models Circular flow model                                                                                                                         -Shows the flow of money, goods and services, and factors of production through the economy. There are three parts: Household                                                                                                                                          -is a person or group of people who share an income.                                                                       -they own the factors of production. Firms                                                                                                                                                   -organizations that produce goods and services for sale.                                                                    -they produce goods by taking inputs (factors of production) and turning them into outputs (finished pro