Vocab Page 1 Flashcards
Real National Income
Refers to the purchasing value of national income
National income
Refers to the claims in the form of income over the value of national output
Potential National income
Refers to what national income ought to be/should be provided that all resources are used to their maximum normal potential.
Nominal National Income
Refers to the numerical value of national income
Actual National Income
Refers to what the national income is in fact what exists in a given moment in time
Inflation
Inflation is a rise in the general level if prices of goods and services over time
Creeping Inflation
Slow but inexorable continuing inflation that, though it seems tolerable in the short run, nonetheless leads to significant long-run price increases. A sustained inflation of 2% per year will cause prices to increase over fivefold in a century
Disinflation
A drop in the inflation rate, that is, a reduction in the rate at which prices increase
Galloping (Hyperinflation)
Very high inflation. Although the threshold is arbitrary economists generally reserve the term “hyperinflation” to describe episodes when the monthly inflation rate is greater than 50% at a monthly rate of 50% an item that costs $1 in January 1 would cost $130 on January 1 of the following year
Indexation
The linking of money payments to changes in price level designed to hold the real value of payments constant
Deflation
A decrease in the general price level that is in the nominal cost of goods and services as well as wages
Unemployment
The state in which a person is without work, available to work, and is currently seeking work
This concept refers to people who are involuntarily out of work
Fractional Unemployment
AKA the “normal” type of unemployment; it involves people in the midst of transiting between jobs, and it is compatible with full employment. It is sometimes called search employment and can be voluntary.
