Unit 13: Business Cycle Flashcards
the branch of economic theory that studies the behavior and decision making of an overall economy by focusing on economic perfromance
Macroeconomics
statistical tools that provide info about the current performance of the economy
Economic Indicators
point to future changes in the economy
leading indicators
usually come after the economy changes
lagging indicators
provide valuable information about the current state of the economy within a particular area because they happen at the same time as they change signal
coincident indicators
the total market value of all final goods and services produced within a countrys borders during a 12 month period, and is used to measure a nations economic growth
GDP
an inflation adjusted measure that reflects the value of all goods and services produced by an economy in a given year
real GDP
an economic metric that breaks down a countrys economic output per person
GDP Per Capita
measures the overall change in consumer prices based on a representative basket of goods and services overtime
Consumer Price Index (CPI)
non institutionalized persons aged 16 or over either working or looking for a job (excluding miltary)
the labor force
calculated each month by the Bureau of Labor Statistics. it is the ratio of unemployed individuals divided by the total number of persons in the civillians labor force expressed as a %
unemployment rate
the situation where workers are between jobs for one reason or another
frictional unemployment
when economic progress, a change in consumer tastes and preferences or a fundamental change in the operations of the economy reduces the demand for workers and their skills
structural unemployment
unemployment directly related to swings in the business cycle
cyclical unemployment
general decrease in the value of money due to increased prices and a higher money supply
inflation
a fall in the general price level and increase in the value of money
deflation
measures how rapidly the overall price level is changing. calculated by determining the % change in the CPI
inflation rate
What does CPI measure?
inflation rate
- distored spending patterns
- reduced purchasing power
- loss of economic efficiency
consequences of inflation
overall increases in demand pull up the average level of prices
demand pull inflation
occurs when overall prices increase due to increases in the cost of wages and raw materials
cost push inflation
relatively low rate of inflation usually 1-3 percent annually
creeping inflation
an extremely high rate of inflation over a short period of time
hyperinflation
a period of stagnant economic growth coupled with inflation
staglfation
the quantity and quality of material goods and services available to a given population
standard of living
result of systematic changes in real GDP marked by alternating periods of expansion and contraction
business cycle
rise and fall of real GDP overtime on an irregular basis
business fluctuations
has 2 alternatiing phases:
1. contraction
2. expansion
phases of the business cycle
a prolonged contraction lasting 6+ months
recession
point where GDP stops going up
peak
turnaround point where real GDP stops going down, and the next expansion begins
trough
a period of uninterrupted growth of real GDP
expansion
growth path the economy would follow if it were not interrupted by alternating periods of recession and recovery
trend line
