Chapter 13 Flashcards
systematic changes in real GDP marked by alternating periods of expansion and
contraction.
Business cycle
changes in real GDP marked by alternating periods of expansion and
contraction that occur on an irregular basis.
Business Fluctuations
decline in real GDP lasting at least two quarters or more.
Recession
period of uninterrupted growth of real GDP, industrial production, real income, and
employment lasting for several years or more; recovery from recession.
Expansion
growth path the economy would follow if it were not interrupted by alternating periods
of recession and recovery.
Trend line
state of the economy with large numbers of unemployed, declining real incomes,
overcapacity in manufacturing plants, and general economic hardship.
Depression
statistical series that normally turns down before the economy turns
down or turns up before the economy turns up.
Leading Economic Indicator
an index of 30 representative stocks used to monitor price
changes in the overall stock market.
Dow Jones Industrial Average (DJIA)
sustained rise in the general level of prices of goods and services.
Inflation
sustained decrease in the general level of the prices of goods and services.
Deflation
index used to measure price changes for a market basket of
frequently used consumer items.
Consumer Price Index (CPI)
representative collection of goods and services used to compile a price index.
Market basket
abnormal inflation in excess of 500 percent per year; last stage of monetary
collapse.
Hyperinflation
index used to measure prices received by domestic producers; formerly
called the wholesale price index.
Producer Price Index (PPI)
explanation that prices rise because all sectors of the economy try to buy
more goods and services than the economy can produce.
Demand-Pull Inflation
explanation that rising input costs, especially energy and organized labor,
drive up the cost of products for manufacturers and thus cause inflation.
Cost-Push Inflation
state of working for less than one hour per week for pay or profit in a non-family-
owned business, while being available and having made an effort to find a job during the past month.
Unemployed
hiring outside firms to perform non-core operations to lower operating costs.
Outsourcing
difference between what the economy can and does produce; annual opportunity cost of
unemployed resources.
GDP Gap
unofficial statistic that is the sum of monthly inflation and the unemployment rate.
Misery Index
