notes from econ 203 week 1 are in the email

ECON 203 WEEK 2

Real GDP per capita:

= Real GDP/population

Example: Real GDP in 1999 = 716 billion

Population = 23.9 million
Answer: 716 billion/23.9 million

(Economic) Growth Rate:

= The difference in the real GDP per capita/real GDP per capita (previous year) x 100

Potential GDP

Measures what the economy could produce if all resources were employed at their normal
levels of utilization.

A business cycle is the periodic but irregular (up and down) movement in economic activity.
Measured by the fluctuations in real GDP around potential GDP

A recession is a period during which the real GDP falls for at leats 2 successive quarters

Output gap
Measures the difference between potential GDP and Real GDP

The 2 types of output gaps:

IF Real GDP < potential GDP

THEN there are some unused resources: Recessionary gap

IF real GDP > potential GDP

THEN some resources are being overused: Boom or Inflationary gap

Unemployment is a serious economic, personal, and social problem.

Economic: Lost incomes and production
Personal: Permanently damage their human capital and job prospects
Social: Puts strains on communities and families. EG increased crime and suicide