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 in 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
Personal Consumption Expenditures Price Index
A price index that includes durable goods, no durable goods, and services and is provided along with estimates for prices of each component of consumption spending
Real value
A value expressed in units of constant purchasing power
Nominal Value
A value expressed in dollars of the current period
Labor force
The total number of people working or unemployed
Unemployment rate
The % of the labor force that is unemployed but looking for work
Frictional unemployment
When it takes time for employers and workers to find each other
Structural unemployment
When a mismatch between worker qualifications and employer requirements differ
Cyclical unemployment
The excess of the unemployment that exists at the natural level of employment
Natural level of employment
The employment level at which the quantity of labor demanded equals the quantity supplied
Natural rate of employment
Rate of unemployment consistent with the natural level of employment (Frictional+Structural)
Discouraged worker
Not unemployed because they are not looking for work
