# of unemployed workers /

labor force X 100

-always above 0% due to frictional unemployment, which is cause by constant job turnover, and structural unemployment

-Natual unemployment = Frictional + Structural

-unemployment that results when there are more people seeking jobs in a labor market than there are jobs available at current wage rate

-the deviation of the actual rate of unemployment from the natural rate

-Actual unemployment = Natural + Cyclical

tells us that the time it takes a variable that grows gradually over time to double is approximately 70 divided by that variable's annual growth rate

# of years for variable to double = 70 / annual growth rate of variable

shows how productivity (real GDP per worker) depends on the quantities of physical capital per worker and human capital per worker as well as the state of technology

GDP=T x (physical capital per worker)^0.4 x (human capital per worker)^0.6

-total amount of savings generated within the economy

-sum of private savings + budget balance

the profit earned on the project expressed as a percentage of its cost

rate of return = revenue from project - cost of project / cost of project x 100

-changes in perceived business opportunities

-changes in the government's borrowing

-changes in private savings behavior

-changes in capital inflows

the increase in consumer spending when disposable income rises by $1

MPC=change in spending / change in disposable income

the increase in household savings when disposable income rises by $1

MPS=1-MPC

the ratio of the total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change

Multiplier = 1 / 1 - MPC

an equation showing how an individual household's consumer spending varies with the household's current disposable income

c = a + MPC x yd

the relationship for the economy as a whole b/w aggregate current disposable income and aggregate consumer spending

C = A + MPC x YD

Can shift due to: -changes in expected future disposable income

-changes in aggregate wealth

planned investment spending + unplanned investment spending

I = Iplanned + Iunplanned

the total amount of planned spending in the economy

AEplanned = C + Iplanned

when aggregate output, measured by real GDP, is equal to planned aggregate spending

the level of real GDP at which real GDP equals planned aggregate spending

GDP = AEplanned + Iunplanned

shows the relationship b/w the aggregate price level and the quantity of agregate output demanded by households, businesses, the government, and the rest of the world

downward sloping

-changes in expectations

-changes in wealth (real value of household assets)

-size of the existing stock of physical capital

-fiscal policy (gov't increases spending or cuts taxes)

-monetary policy (central bank increases quantity of money)

-changes in commodity prices 

-changes in nominal wages

-changes in productivity

shows the relationship b/w the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible

vertical at potential output level

the use of gov't policy to reduce the severity of recessions and rein in excessively strong expansions

use of fiscal or monetary policy

gov't programs intended to protect families against economic hardship

social security, medicare, medicaid

increases aggregate demand

-increase in gov't purchases of goods and services

-a cut in taxes

-increase in gov't transfers

reduces aggregate demand

-reduction in gov't purchases of goods and services

-an increase in taxes

-reduction in gov't transfers

whether the gov't is running a surplus or deficit

equal to savings by government

Sgovernment = T - G - TR