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34 Cards in this Set
- Front
- Back
Economic growth |
Increase in real GDP or increase in real GDP per capita |
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Real GDP per capita |
Dividing real GDP by the size of the population then compared in percentage terms with that of the previous period |
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Rule of 70 |
Quantitative grasp of the effect of economic growth (how long will it take to double) |
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Productivity |
Measured broadly as real output per unit of input |
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Business cycle |
Alternating rises and declines in the level of economic activity |
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Peak |
Business activity has reached a temporary maximum |
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Recession |
A period of decline in total output, income, employment, and trade |
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Trough |
Lowest levels of the recession |
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Recovery |
Output and employment rise toward full employment |
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Labor force |
Consists of people who are able and willing to work |
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Unemployment rate |
Percentage of the labor force unemployed (unemployed ÷ labor force × 100) |
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Discouraged workers |
Unsuccessful seeking employment for a time and drop out of the labor force |
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Frictional unemployment |
Search/wait unemployment |
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Structural unemployment |
Changes over time in consumer demand and in technology alter total demand of labor, both occupationally and geographically |
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Cyclical unemployment |
Deficient-demand; decline in total spending and is likely to occur in the recession phase |
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Full-employment rate of unemployment |
Unemployment rate occuring when there is no cyclical employment of the labor force |
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Natural rate of unemployment (NRU) |
When expected inflation equals actual inflation |
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Potential output |
The real output (GDP) an economy can produce when it fully employs its avaliable resources |
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GDP gap |
Sacrifice of output; the difference between actual and potential GDP |
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Okun's law |
For every 1 percentage point by which the actual unemployment rate exceeds the natural rate, a negative GDP gap of about 2 percent occurs |
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Inflation |
Rise in the general level of prices; reduces the "purchasing power" of money |
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Consumer Price Index (CPI) |
Main measure of inflation; measures the prices of a fixed "market basket" of some 300 goods and services bought by a "typical"consumer |
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Demand-pull inflation |
When resources are already fully employed, the business sector cannot respond to excess demand by expanding output, so it bids up the prices of limited output |
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Cost-push inflation |
Increases in the price level resulting from an increase in resource cost |
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Per-unit production costs |
Average cost of a particular level of output; found by dividing the total cost of all resource inputs by the amount of output produced |
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Nominal income |
Number of dollars received as wages, rent, interest, or profits |
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Real income |
Measure of the amount of goods and services nomial income can buy; (nominal income ÷ price index) |
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Anticipated inflation |
Fully expected, an income receiver may be to avoid or lessen the adverse effects of inflation or real income |
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Unanticipated inflation |
Inflation whose full extent was not expected |
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Cost-of-living adjustments (COLAs) |
An automatic increase in the income of workers when inflation occurs |
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Real interest rate |
Percentage increase in purchasing power that the borrower pays the lender |
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Nominal interest rate |
Percentage increase in money that the borrower pays the lender, including simultaneously hurt and benefited by inflation |
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Deflation |
Declines in the price level |
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Hyperinflation |
Extremely rapid inflation whose impact on real output and employment is usually devastating |