Economics: Monopoly and Competition Concepts

The value of the final goods and services produced within a country's borders in a given period of time.

GDP measures the total value of all final goods and services produced within a country's borders using market prices.

Non-market goods and services are those that are not typically bought and sold in the market, such as unpaid housework or the value of a stay-at-home parent's work.

A dairy buys milk, cartons, and utilities to produce cartons of milk that are then sold to a grocery store. The cost of these intermediate goods (milk, cartons, and utilities) is only counted once in GDP, for the value of the final product (cartons of milk).

GNP measures the total value of all final goods and services produced by a country's citizens, regardless of where they are located.

The consumption component of GDP captures all the spending by households on goods and services, which is considered personal consumption expenditures.

The investment component of GDP includes spending on business capital, such as new machinery, equipment, and structures. It also includes spending on residential construction.

The government purchases component of GDP includes spending by the government on goods and services, but not transfer payments like unemployment benefits or social security.

The net exports component of GDP is the value of exports minus imports.

The GDP deflator is a price index that measures the overall price level of the goods and services produced in an economy.

The consumer price index (CPI) is a price index that measures the overall price level of a basket of goods and services typically consumed by households.

The inflation rate is the percentage change in the price level over a period of time.

It measures how much the prices of goods and services in an economy have changed over time.

The production function shows the relationship between the inputs used in production and the output produced.

The state of technology refers to the knowledge used in production, which can be embodied in tools, machines, and processes.

Human capital refers to the skills, knowledge, and experience that workers possess. It is acquired through education, training, and on-the-job experience.

Physical capital includes the tools, machines, equipment, and buildings that are used in the production process.

Natural resources are inputs that are provided by nature, such as land, minerals, and energy resources.

The labor force is the sum of the employed and the unemployed.

It refers to the percentage of the adult population that is in the labor force.

The unemployment rate is the percentage of the labor force that is unemployed.

Frictional unemployment is short-term unemployment that arises from the time it takes for workers to find a new job after they have been laid off or have voluntarily left a job.

Structural unemployment is long-term unemployment that arises from a mismatch between the skills that workers have and the skills that are demanded in the labor market.

Cyclical unemployment is unemployment that arises from short-term fluctuations in the economy, such as recessions.

The natural rate of unemployment is the rate of unemployment that exists when the economy is operating at a sustainable rate of output, also known as the long-run equilibrium.

Minimum-wage laws set a minimum price that employers can pay for labor. When the minimum wage is set above the equilibrium wage, it can lead to unemployment.

Labor unions are organizations of workers that bargain with employers over wages, benefits, and other working conditions.

Efficiency wages are wages that are paid above the market-clearing wage to encourage workers to be more productive and reduce turnover costs.

Money is anything that is generally accepted as a medium of exchange, a unit of account, and a store of value.

The money supply is the total amount of money in circulation in an economy.

The Federal Reserve (Fed) is the central bank of the United States, it is responsible for regulating the U.S. monetary system and for ensuring the health and stability of the financial system.

Open market operations are the buying and selling of U.S. government bonds by the Fed. To increase the money supply, the Fed buys bonds, and to decrease the money supply, it sells bonds.

The discount rate is the interest rate at which commercial banks can borrow money directly from the Fed.

The reserve ratio is the percentage of deposits that banks are required by law to hold in reserve, rather than lend out.

Velocity is the speed at which money circulates in the economy.

Inflation tax is a hidden tax that occurs when a government prints more money to finance its spending. This causes inflation, which reduces the purchasing power of money.

Shoeleather costs are the costs of reducing cash holdings in response to inflation.

Monetary neutrality is the idea that changes in the money supply only affect nominal variables, such as price level and nominal GDP, but not real variables, such as output and real GDP.

The short-run Phillips curve shows the relationship between inflation and unemployment in the short run.