Notes

11. no government spend for goods and services, so A incorrect. market for good and services onncets household spending to goods produced by firms. Market for factors (product market). market for goods and services connect household spending to goods and services produced by factors.
2. how to calculate measure of value of GDP, income approach, the expenditure approach adds up the demand of the equation, income sums up all income earned by factors of production including profits.
4. non-market transactions such as mowing your neighbor's lawn or do-it-yourself-activities are not included in GDP, it does account for browsings on the Web cause it costs money to produce ads, GDP does not account for distribution of income or income equality in a nation (wealth distribution)
5. calculations of GDP include unsold inventories of goods (investment spending), it also includes things that cause pollution, and it doesn't include illegal activities.
6. GDP accounts for cleanup of an oil spill because it affects services associated with it. they have to pay for that clean up.
7. Discouraged workers, are those who are not looking for a job and are unemployed, marginal workers. If you self employ, then you're not discouraged about jobs, you are fine with not having an official job.
8. structural employment also includes when a factory worker is displaced by automation
12. Disinflation refers to a slowdown in the rate of increase in the consumer price index or inflation.
13. go to bank, you given a cd that bank will pay you, Myron gave bank 10,000 dollars, if prices fallen by 5% then Myron gains while bank loses. Bank owes Myron, not other way around.
14. When the actual inflation rate exceeds the expected inflation rate, lenders will receive lower real interest rates than expected. Therefore, this will harm lenders with fixed-interest rate loans.
15. when actual inflation rate is bigger than real inflation rate, the income of workers will reduce.
3 percent= real + inflation. real inflation is -1, inflation rate is 4%
16. Nominal GDP uses current prices to measure the value of final output, while real GDP uses constant prices.
17. Real GDP= Nominal GDP/GDP deflator
19. Output gap= actual GDP - potential GDP
20. business cycle, full employment, actual is equal to potential GDP, 2015 is only year given
21. At the trough of a business cycle, there is a recessionary gap, and the unemployment rate is higher than the natural rate of unemployment.