Bernard 's AP Macroeconomics Blog

Population - number of people in a country . Labor force - number of people in a country a country that are classify as employed or unemployed. Employed - people who are 16 year of age or older that have a job . Unemployed - people who are 16 year of age or older who did not have a job , but have actively searching for a job in the last 2 weeks. Unemployment - failure to use a viable resources particularly labor to produce desire good and services. Unemployment rate:   # of unemployed/ Total labor force x 100 (# of employed + # of unemployed) 4 to 5% = unemployment rate Not in the labor force Students Retired People institutionalized (mental) Prisoners Military  Disabled People who given up looking for a job                                                        Type of Unemployment  Frictional - between jobs ( temporally unemployed ) - individual are qualified workers with transferable skills but they are not working. High school or college graduates l

Inflation - a general rise in the price level ( $1 can buy less in general than a $1 in the past due to inflation ) Deflation - decline in the general price level Disinflation - occurs when the inflation rate it self declines. Real interest rate-  the cost of borrowing or lending money that has been adjusted for inflation(%) Nominal interest rate-   expected rate of inflation Nominal interest rate-   the un-adjusted cost of borrowing money (real interest rate+ expected rate of inflation) Inflation rate  new year - old year / old year x100                                         Demand(pull inflation ) vs Cost(push inflation) Demand - to many dollars chasing too few goods Trigger by an increased of aggregate demand  Output and employment rise while the price level is rising Spending increase faster then production  Cost push - cost by arise by per unit production cost due increasing research cost. Trigger by a decrease of aggregate supply  Output and employm

Gross Domestic Product (GDP) - Total market value of all final goods and services produce within the country border within a given year . Gross Natural Product(GNP)  - It's a measure what the citizens product and whether they produce these items in their border. C= Consumption Expenditures(67%) IG= Gross Private Domestic Investment(17%) G= Government Spending (20%) Xn= Net Exports(exports-imports)(-4%) C+IG+G+Xn=GDP IG Factor equipment maintenance  New  factor equipment  Construction of housing  Unsold inventory of product built in a year                                            Not Counted in GDP Used or second second hand goods - avoid double or multiple counting  Gifts or transfer payments (Public- social security, welfare or Private- scholarships ) Stocks or bonds ( not counted ) Purely financial transaction , Their is no output being produce Unreported business activities (tips) Illegal activities( Underground) Non-market activities(ex. babysittin

Circular Flow - Shows the flow of money goods and services and factor of production throughout the economy . 3 entries  Household - person or group of people who share income. Household owns the Factor of Production  Firms - is an organization that produces goods and services . Firms produce goods by taking imports, which is your FOP product and turning them into output , which is your finished product. Government - Their provider of public goods and services and demanders of both private good and services and the factor of production. 2 market  Product market - this is where goods and services are bought and sold ; exchange finish good for money  Factor market(Resource market) - where resources especially capital and labor are bought and sold . Exchange factor of production for money. 

Business Cycle - fluctuation in economic activity that an economy experiences over a period of time.  4 phases  Expansion - Spending increases ↑ Unemployment decreases ↓ best phase to be in ( ex . Construction ) Peak - The highest point of real GDP greatest spending lowest unemployment, however inflation becomes a problem. Contraction/Recession - real GDP decline for 6 months (reduction of spending level , increase in unemployment) Trough - lowest point of real GDP least amount of spending highest unemployment.