CH 11 Flashcards
Real GDP (Real Gross Domestic Product)
The total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices
Nominal GDP (Gross Domestic Product)
The total value of final goods and services for a particular period valued in terms of prices for that period
Business Cycle
The economy’s pattern of expansion, then contraction, then expansion again
Expansion
A sustained period when real GDP is rising
Recession
A sustained period in which real GDP is falling
Peak
The point at which an expansion ends and a recession begins
Trough
The point at which a recession ends and an expansion begins
Inflation
An increase in the average level of prices
Deflation
A decrease in the average level of prices
Hyperinflation
An inflation rate in excess of 200% per year
Price Index
A number whose movement reflects movement in the average level of prices
Disinflation
A reduction of the inflation rate while inflation is still positive
Base period
A time period which costs I’d the market basket in other periods will be compared in computing a price index
Consumer Price Index (CPI)
A price index whose movement reflects changes in the prices of goods and services typically purchased by consumers
Implicit price deflator
A price index for all final goods and services produced
