Macro quiz 1 Flashcards
business cycle
the short-run alternation between economic downturns known as recessions, and economic upturns, known as expansions.
depression
a very deep and prolonged downturn.
recessions
a period of economic downturn when output and unemployment are falling; also referred to as a contraction.
expansions
period of economic upturn in which output and employment are rising; most economic numbers are following their normal upward trend; also referred to as a recovery.
employment
the total number of people currently employed for pay in the economy, either full-time or part-time.
unemployment
the total number of people who are actively looking for work but aren’t currently employed.
labor force
the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment.
unemployment rate
the percentage of the total number of people in the labor force who are unemployed, calculated as unemployment/ (unemployment + employment).
output
the quality of goods and services produced.
aggregate output
the economy’s total production of final goods and services for a given time period, usually a year. Real GDP is the numerical measure of aggregate output typically used by economists.
inflation
a rise in the overall price level.
deflation
a fall in the overall level of prices.
price stability
when the aggregate price level is changing only slowly.
economic growth
an increase in the maximum amount of goods and services an economy can produce.
model
a simplified representation of a real situation that is used to better understand real-life situations.
