Eco 201 Chapter 26 (9)

Front 1

Alternating rises and declines in the level of economic activity, sometimes over several years

Back 1

Business cycles

Front 2

Business has reached a temporary maximum

Back 2

Peak

Front 3

A period of decline in total output, income, and employment. This downturn, which lasts 6 months or more, is marked by the widespread contraction of business activity in many sectors of the economy

Back 3

Recession

Front 4

Output and employment "bottom out" at their lowest levels

Back 4

Trough

Front 5

A period in which real GDP, income, and employement rise.

Back 5

Expansion

Front 6

General sources of shocks that can cause business cycles

Back 6

-Irregular innovation
-Productivity Changes
-Monetary factors
-Political events
-Financial instability

Front 7

Consists of people who are able and willing to work

Back 7

Labor force

Front 8

The percentage of the labor force unemployed;

(Unemployed/Labor force)x100

Back 8

Unemployment Rate

Front 9

Many workers, after unsuccessfully seeking employment for a time, become discouraged and drop out of the labor force.

Back 9

Discouraged workers

Front 10

Consisting of search unemployment and wait unemployment, "voluntary"

Back 10

Frictional unemployment

Front 11

Changes over time in consumer demand and in technology alter the composition of the total demand for labor, both occupationally and geographically

Back 11

Structural unemployment

Front 12

As the demand for goods and services decreases, employment falls and unemployment rises. Typically begins in the recession phase of the business cycle, "natural"

Back 12

Cyclical unemployment

Front 13

The unemployment rate that is consistent with full employment

Back 13

Natural rate of unemployment

Front 14

The difference between actual and potential GDP

Back 14

GDP gap

Front 15

Indicates that for every 1 percentage point by which the actual unemployment rate exceeds the natural rate, a negative GDP gap of about 2 percent occurs.

Back 15

Okun's law

Front 16

Is a rise in the general level of prices

Back 16

Inflation

Front 17

The main measure of inflation in the United States

(price of the most recent market basket in the specific year/ price estimate of the market back in base year) x 100

Back 17

Consumer Price Index (CPI)

Front 18

[(CPI2 - CPI1) / CPI1] x 100

Back 18

Rate of inflation

Front 19

When the excess demand bids the prices of limited output

Back 19

Demand-pull inflation

Front 20

Rising prices in terms of factors that raise per-unit production costs at each level of spending

Back 20

Cost-push inflation

Front 21

The underlying increases in the CPI after volatile food and energy prices are removed.

Back 21

Core inflation

Front 22

The number of dollars received as wages, rent, interest, or profit.

Back 22

Nominal income

Front 23

A measure of the amount of goods and services nominal income can buy; it is the purchasing power of nominal income, or income adjusted for inflation

(nominal income/price index)

Back 23

Real income

Front 24

Unanticipated inflation hurts:

Back 24

-Fixed-income receivers
-Savers
-Creditors

Front 25

Unanticipated inflation doesn't affect or helps:

Back 25

-Flexible-income receivers
-Debtors

Front 26

When benefits automatically increase when the CPI increases, preventing erosion of benefits from inflation

Back 26

Cost-of-living adjustments

Front 27

The percentage increase in purchasing power that the borrower pays the lender.

Back 27

Real interest rate

Front 28

The percentage increase in money that the borrower pays the lender, including that resulting from the built-in expectation of inflation, if any.

Back 28

Nominal interest rate

Front 29

Extraordinarily rapid inflation

Back 29

Hyperinflation