Unit 4 Key Terms Part 3 Flashcards
the market value of all final goods and services produced within a country during a given period of time
Gross Domestic Product
the price buyers are willing to pay for a good or service in a competitive market
Market Value
any new good that is ready for consumer use; final goods are included in the calculation of GDP
Final Good
a good used in the production of a final good; intermediate goods are not included in the calculation of GDP
Intermediate Goods
the value of all exports minus all imports
Net Export
a measure of a country’s economic output (GDP) valued in current dollars; nominal GDP does not reflect the effects of inflation
Nominal GDP
the value of a dollar in the year it is spent; a measure of the dollar’s value that reflects current purchasing power, without taking inflation into account
Current Dollars
a measure of a country’s economic output (GDP) valued in constant dollars; real GDP reflects the effects of inflation
Real GDP
the value of the dollar fixed at a specified base year; a measure of the dollar’s value adjusted for inflation to reflect purchasing power over time
Constant Dollars
a nation’s real GDP divided by its population; a measure of average economic output per person
Per Capita GDP
the percentage of people in a country who can read and write
Literacy Rate
the number of years, on average, that a person is expected to live; a key indicator of a nation’s health and well-being
Life Expectancy
the rate at which babies die during their first year of life; a key indicator of a nation’s health and well-being
Infant Mortality
the percentage of the labor force that is not employed but is actively seeking work
Unemployment Rate
a type of unemployment that results when workers are seeking their first job or have left one job and are seeking another
Frictional Unemployment
a type of unemployment that results when the demand for certain skills declines, often because of changes in technology or increased foreign competition; under such conditions, workers may need retraining to find new jobs
Structural Unemployment
a type of unemployment that results when businesses shut down or slow down for part of the year, often because of weather
Seasonal Unemployment
a type of unemployment that results from a period of decline in the business cycle; unemployment caused by a contraction
Cyclical Unemployment
the percentage of the labor force without work when the economy is at full employment; a condition in which the economy is strong and there is no cyclical unemployment
Natural Rate of Unemployment
unemployed workers who have ceased to look for work; discouraged workers are not considered part of the labor force and are not factored into the unemployment rate
Discouraged Workers
people who settle for part-time employment because they are unable to find full-time work
Involuntary Part-Time Workers
a sector of the economy based on illegal activities, such as drug dealing and unlawful gambling
Underground Economy
the percentage increase in the average price level of goods and services from one month or year to the next
Inflation Rate
a measure of the average change in price of a type of good over time
Price Index
a measure of price changes in consumer goods and services over time; the CPI shows changes in the cost of living from year to year
Consumer Price Index
a measure of change in the overall cost of goods and services; another term for the consumer price index
Cost-of-Living Index
the cost in current dollars of all the basic goods and services needed by the average consumer
Nominal Cost of Living
the cost in constant dollars of all the basic goods and services needed by the average consumer; the nominal cost of living adjusted for inflation
Real Cost of Living
wage levels based on current dollars
Nominal Wages
wage levels based on constant dollars; nominal wages adjusted for inflation
Real Wages
a gradual, steady rise in the price of goods and services over time
Creeping Inflation
a fall in the price of goods and services; the opposite of inflation
Deflation
a downward trend in prices, wages, and business activity; a deflationary pattern in which falling prices cause a business slow-down, which in turn leads to lower wages, a further fall in prices, and even less business activity
Deflationary Spiral
a rise in the price of goods and services caused by an increase in overall demand
Demand-Pull Inflation
a recurring pattern of growth and decline in economic activity over time
Business Cycle
a period of economic growth
Expansion
the highest point of an expansion, or period of economic growth; a peak is followed by economic decline
Peak
a period of general economic decline marked by falling GDP and rising unemployment
Contraction
the lowest point of a contraction, or period of economic decline; a trough is followed by economic growth
Trough
measures that consistently rise or fall several months before an expansion or a contraction begins
Leading Economic Indicators
measures that consistently rise or fall several months after an expansion or contraction begins
Lagging Economic Indicators
a period of declining national economic activity, usually measured as a decrease in GDP for at least two consecutive quarters (six months)
Recession
merchandise that companies or stores have on hand
Inventory
a prolonged economic downturn characterized by plunging real GDP and extremely high unemployment
Depression
a sector of the economy that operates without government regulation or monitoring and is not officially recorded or taxed; the informal economy is not included in the calculation of GDP
Informal Economy
a rise in the price of goods and services caused by an increase in overall demand
Demand-Pull Inflation
an upward trend in wages and prices; an inflationary pattern in which rising prices lead to demands for higher wages, causing producers to raise prices further and workers to demand additional wage hikes
Wage-Price Spiral
a rise in the price of goods and services caused by increases in the cost of the factors of production
Cost-Push Inflation
