Macro Economics Chapter 06 Key Words

Question 2

business cycle

Answer 2

Alternating periods of economic growth and contraction, which can be measured by changes in real GDP.

Question 3

civilian labor force

Answer 3

The number of people 16 years of age and older who are employed or who are actively seeking a job, excluding armed forces, homemakers, discouraged workers, and other persons not in the labor force.

Question 4

coincident indicators

Answer 4

Variables that change at the same time that real GDP changes.

Question 5

cyclical unemployment

Answer 5

Unemployment caused by the lack of jobs during a recession.

Question 6

discouraged worker

Answer 6

A person who wants to work, but who has given up searching for work because he or she believes there will be no job offers.

Question 7

economic growth

Answer 7

An expansion in national output measured by the annual percentage increase in a nation’s real GDP.

Question 8

frictional unemployment

Answer 8

Unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed.

Question 9

unemployment

Answer 9

jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed.

Question 10

full employment

Answer 10

The situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates, also called the natural rate of unemployment.

Question 11

GDP gap

Answer 11

The difference between actual real GDP and potential or full employment real GDP.

Question 12

lagging indicators

Answer 12

Variables that change after real GDP changes.

Question 13

leading indicators

Answer 13

Variables that change before real GDP changes.

Question 14

peak

Answer 14

The phase of the business cycle in which real GDP reaches its maximum after rising during a recovery.

Question 15

recession

Answer 15

A downturn in the business cycle during which real GDP declines, and the unemployment rate rises. Also called a contraction.

Question 16

recovery

Answer 16

An upturn in the business cycle during which real GDP rises. Also called an expansion.

Question 17

structural unemployment

Answer 17

Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities.

Question 18

trough

Answer 18

The phase of the business cycle in which real GDP reaches its minimum after falling during a recession.

Question 19

unemployment rate

Answer 19

The percentage of people in the civilian labor force who are without jobs and are actively seeking jobs.