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23 Cards in this Set
- Front
- Back
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Economic Growth
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An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology
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Real GDP per capita
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Inflation-adjusted output per person; real GDP/population
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Rule of 70
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A method for determining the number of years it will take for some measure to double, given its annual percentage increase.
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Productivity
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A measure of average output or real output per unit of input.
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Business Cycles
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Recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases
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Peak
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The point in a business cycle at which business activity has reached a temporary maximum; the economy is near or at full employment and the level of real output is at or very close to the economy's capacity.
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Recession
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A period of declining real GDP, accompanied by lower real income and higher unemployment
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Trough
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Output and employment "bottom out" at their lowest levels.
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Expansion
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A phase of the business cycle in which real GDP, income, and employment raises
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Labor Force
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Persons 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
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The percentage of the labor force unemployed at any time
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Frictional unemployment
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A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs
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Structural unemployment
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Unemployment of workers whose skills are not demanded by employers who lack sufficient skill to obtain employment, or who cannot easily move to locations where jobs are available.
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Cyclical unemployment
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A type of unemployment caused by insufficient total spending
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Potential output
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The real GDP an economy can produce when it fully employs its available resources
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GDP gap
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Actual gross domestic product minus potential output; may be either a positive amount or a negative amount
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Consumer price Index (CPI)
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An index that measures the prices of a fixed "market basket" of some 300 goods and services bought by a "typical" consumer.
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Nominal income
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The number of dollars received by an individual or group for its resources during some period of time.
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Real income
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The amount of goods and services that can be purchased with nominal income during some period of time; nominal income adjusted for inflation.
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Cost-of-living adjustments (COLA's)
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An automatic increase in the incomes (wages) of workers when inflation occurs; guaranteed by a collective bargaining contract between firms and workers.
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Real interest rate
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The interest rate expressed in dollars of constant value (adjusted from inflation) and equal to the nominal interest rate less the expected rate of inflation.
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Nominal interest rate
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The interest rate expressed in terms of annual amounts currently charged for interest and not adjusted for inflation
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Deflation
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A decline in the economy's price level
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