Unit 1 Flashcards
The total quantity of final goods and services produced within an economy
Aggregate Output
The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes
Real GDP
The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced
Nominal GDP
The method of calculating changes in the real GDP using the average between the growth rate calculated using early base year and the growth rate calculated using a later base year
Chain-linking
The GDP divided by the size of the population; equal to the average GDP per person
GDP per capita
People are currently holding a job in the economy, either full time or part time
Employed
People are actively looking for work but aren’t currently employed
Unemployed
Equal to the sum of the employed and the unemployed
Labor Force
The percentage of the population aged 16 or older that is in the labor force
Labor force participation
The percentage of the total number of people in the labor force who are unemployed
Unemployment rate
Nonworking people who are capable of working but have given up looking for job due to the state of the job market
Discouraged workers
Would like to be employed and have looked for a job in the recent past but are not currently looking for work
Marginally attached workers
Workers who would like to work more hours or who are overqualified for their jobs
Underemployed
Workers who spend time looking for employment
Job search
Unemployment due to the time workers spend in job search
Frictional Unemployment
Unemployment that results when workers lack the skills required for the available jobs, or there are or people seeking jobs in a labor market than there are jobs available at the current wage rate
Structural Unemployment
Wages that employers set above the equilibrium wage rate as an incentive for better employee performance
Efficiency wages
Unemployment rate that arises from the effects of frictional plus structural unemployment
Natural rate of unemployment
Deviation of the actual rate of unemployment from the natural rate
Cyclical unemployment
Wage rate divided by the price level to adjust for the effects of inflation or deflation
Real Wage
Income divided by the price level to adjust for the effects of inflation or deflation
Real Income
Percentage increase in the overall level of prices per year
Inflation Rate
Increased costs of transactions caused by inflation
Shoe-leather costs
The real costs of changing listed prices
Menu costs
Arise from the way inflation makes money a less reliable unit of measure
Unit-of-account costs
Interest rate actually paid for a loan
Nominal interest rate
Nominal interest rate minus the rate of inflation
Real interest rate
the process of bringing the inflation rate down
Disinflation
Measure of the overall level of prices in the economy
Aggregate Price level
Hypothetical set of consumer purchases of gods and services
Market Basket
Measures the cost of purchasing a given market basket in a given year. The index value is normalized so that it is equal to 100 in a selected base year.
Price Index
Measures the cost of the market basket of a typical urban American family.
Consumer Price Index (CPI)
Measures the prices of goods and services purchased by producers.
Producer Price Index (PPI)
For a given year is 100 times the ratio of nominal GDP to real GDP in that year.
GDP deflator
