Daniel Kaplan Macroeconomics Midterm Review Sheet Definitions 1 Demand Curve 2 Quantity Demanded 3 Supply Curve 4 Quantity Supplied a Function that shows the quantity demanded at different prices a Quantity buyers are willing and able to purchase at a particular price a Function that shows the quantity supplied at different prices a Quantity producers are willing and able to supply at a particular price 5 Market Equilibrium a The intersection of the supply curve and the demand curve 6 Nominal Gross Domestic Product a The market value of all final goods and services within a country s borders in a year 7 Nominal Gross Domestic Product per capita a Nominal GDP divided by the country s population 8 Real Gross Domestic Product a GDP measured using constant year prices 9 Real Gross Domestic Product per capita a Real GDP divided by the country s population 10 Growth rate of nominal GDP per capita a GD Pt G D Pt 1 GDP t 1 11 Growth rate of real GDP per capita a Grgdp G ngdp G price n b Growth per capita nominal GDP growth inflation pop growth 12 The long run average growth rate of real GDP per capita in the US a 1 8 per year nominal is 5 per year 13 Identify the expenditure side components of GDP Y C I G Ex Im a b Consumption of households investments by firms government consumption investment exports imports 14 Identify two proximate factors that determine real GDP per capita 15 Identify two deep factors that determine real GDP per capita a Capital per worker b Education per worker c Specialization Institutions a b Trade c Property rights a Property rights structure b Free trade 16 Identify two economic institutions that can affect real GDP per capita 17 Identify two political institutions that can affect real GDP per capita a Ease of starting business competitive open market b Property rights 18 Know the four equations that characterize the Solow growth model a Production function b Savings function investment function c Depreciation function d Capital accumulation function Delta K I d 19 Define steady state in the context of the Solow growth model a When catch up growth is done and level of k is reached then growth returns to the normal rate 20 List four development traps a Conflict b Resource curse c Landlocked d governance 21 Distinguish real income per capita from median per capita income a Real income per capita is GDP person while median per capita income is the income of the middle person in the distribution 22 Identify two explanations for the widening of income inequality in the US since 1980 a Trade globalization expansion b Technology skills growth c Demographic explanation 23 Define the US poverty line a 15 poverty rate in 2012 b 12 00 per year for one 21 000 for family of 3 pre tax income c health insurance Medicaid head start food stamps 24 Define nominal interest rate a The rate of interest before adjusting for inflation 25 Define real interest rate a The rate of interest after adjusting for inflation 26 Identify three examples of financial intermediaries a Banks b Bond market c Stock market 27 To be considered unemployed in the United States you must fulfill three criteria List these a Not currently employed b Available to work c Have searched for work in the past 4 weeks 28 Define labor force participation ratio a Employed Unemployed Working Age Non institutionalized pop 29 Define employment population ratio a Labor force employed total population 30 List three types of unemployment a Frictional b Structural c Cyclical 31 Define Consumer Price Index Producer Price Index GDP Deflator a CPI market price of a typical basket of goods purchased by consumers scaled to some base year b PPI an average of prices faced by firms includes final and intermediate goods c GDP Deflator measures average price of all goods services 32 State the quantity equation in levels a Price is proportional to the money stock inflation is caused by growth in the money supply b MV PY c M money supply V velocity of money P price level Y real GDP 33 List two reasons that money serves a special role in the economy It s the good we denominate prices in Unit of account a b Good we trade for other goods Medium of exchange