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29 Cards in this Set
- Front
- Back
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business cycle |
altering rises and declines in the level of economic activity |
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peak |
point in a business cycle when the business activity has reached a temporary max |
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recession |
a period of declining real gdp, accompanied by lower real income and higher unemployment |
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trough |
point in business cycle at which business activity has reached a temporary minimum. |
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expansion |
phase of the business cycle in which the real gdp income and employment rise |
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irregular innovation |
new products or production methods such asrp rapidly spread through the economy,sparking sizable increases in investment,consumption, output, and employment |
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productivity |
output per unit of input |
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monetary factors |
when a nation's central bank shocks the economy by creating more money than people were expecting, and inflationary boom in output occurs |
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political evnts |
unexpected events such as peace treaties, new wars, 9/11 |
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financial instability |
unexpected financial bubbles or burst |
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labor force |
person 16 years of age and older who are not in institutions and who are employed or are unemployed and seeking work |
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unemployment rate |
the percentage of the labor force unemployed at any time unemployment rate = unemployed / labor force x 100 |
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discouraged workers |
employees who have left the labor force because they have not been able to find employment |
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frictional employment |
type of unemployment cause by workers voluntarily changing jobs and temporary layoffs |
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natural rate of unemployment (NRU) |
the unemployment rate at which actual inflation equals expected inflation |
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potential output |
the real gdp an economy can produce when it fully employs its available resources |
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gdp gap |
the difference between actual and potential gdp
gdp gap = actual gdp - potential gdp |
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okun's law |
for every one percentage point by which the actual unemployment rate exceeds the natural rate |
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consumer price index (CPI) |
measure of inflation cpi = price of the most recent market basket in the particular year / price estimate of the market basket x 100 |
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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 cost |
per-unit production cost = total input cost / units of output |
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core inflation |
the underlying resources in the CPI after volatile food and energy prices are removed |
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nominal income |
the number of dollars received as in wages,rent,interest, profit |
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real income |
measure of the amount of goods and services nominal income can buy real income = nominal income / price index |
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unanticipated inflation |
inflation that was not expected |
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cost of living adjustments ( COLA) |
automatic increase in the incomes |
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real interest rate |
the percentage increase in purchasing power that the borrower pays the lender |
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nominal interest rate |
the percentage rate increase in the money that the borrower pays the lender real interest rate + inflation premium |
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hyper inflation |
rapid inflation |
