EC140 Study Guide - Midterm Guide: Transfer Payment, Counting Measure, Gdp Deflator

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15 Sep 2018
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EC140 Full Course Notes
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EC140 Full Course Notes
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Chapter 21: the simplest short-run macro model. Chapter 22: adding government and trade and the simple macro model. Chapter 23: aggregate demand and aggregate supply and. Production of goods and services generates income. Nominal national income: calculated in current dollars. Total production of goods and services valued at market price (where possible) Real national income: calculated at prices forma base year. Today"s production measured at prices from a base year. How much the economy could produce if it is operating normally. When actual gdp exceeds potential gdp: inflation gaps. When actual gdp falls short to potential gdp: recessionary gaps. Associated with unemployment, wages do not rise as fast therefore creating this situation. Peak: when it rises and reaches a peak. Recessions are extended periods of weak economic activity. Sometimes defined as consecutive quarters (so six months) with negative growth in real gdp. Recessionary gap does not imply or require a recession.

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