Chapter 7 – Business Cycles, Unemployment, And Inflation Flashcards Preview

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Flashcards in Chapter 7 – Business Cycles, Unemployment, And Inflation Deck (39)
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0
Q

Business cycle

A

Recurring increases and decreases in the level of economic activity over periods of years.

1
Q

Economic theory

A

Deriving economic principles from relevant economic facts; an economic principle.

2
Q

Peak

A

A phase in the business cycle during which the economy is at full employment and the level of real output is at or very close to the economies capacity.

3
Q

Recession

A

A period of decline in total output, income, and employment.

4
Q

Trough

A

The points during a recession or depression when output and employment reach their lowest levels.

5
Q

Expansion

A

The phase of the business cycle during which output and employment rise toward full employment.

6
Q

Productivity

A

A measure of the average output or real output per unit of input.

7
Q

Labor force

A

People 15 years of age and older who are not in institutions and who are employed, or are unemployed and seeking work.

8
Q

Unemployment rate

A

The percentage of the labor force that is unemployed at any time.

9
Q

Discouraged workers

A

People who have left the labor force because they have not been able to find employment

10
Q

Frictional unemployment

A

A type of unemployment caused by workers voluntarily changing jobs and my temporary layoff; unemployed workers between jobs.

11
Q

Structural unemployment

A

Unemployment of workers who skills are not demanded by employers, who lack sufficient skills to obtain employment, or who cannot easily move to locations where jobs are available.

12
Q

Cyclical unemployment

A

Unemployment caused by a decline in total spending or by insufficient aggregate demand.

13
Q

Seasonal unemployment

A

Unemployment caused by seasonal factors.

14
Q

Natural rate of unemployment or NRU

A

The unemployment rate that occurs when no cyclical unemployment exists and the economy is achieving its potential output.

15
Q

Potential GDP

A

The real output an economy can produce when it fully employs it’s available resources

16
Q

GDP gap

A

The amount by which actual GDP falls below potential GDP.

17
Q

Correlation

A

A systematic undependable association between two sets of data; does not necessarily indicate causation.

18
Q

Okun’s Law

A

The generalization that any one percentage point rise in an employment rate above the natural rate of unemployment will decrease GDP by 2% of economies potential GDP.

19
Q

Inflation

A

A continual rise in the general level of prices in an economy.

20
Q

Consumer price index or CPI

A

And index that measures the prices of a fixed market basket of goods and services that is brought by typical consumer.

21
Q

Demand pull inflation

A

Increases in the price level caused by an excess of total spending beyond the economy’s capacity to produce.

22
Q

Cost push inflation

A

Increases in the price level resulting from an increase in resource costs and hence in the per unit production cost.

23
Q

Per unit production cost

A

The average production cost of a particular level of output; total input cost divided by units of output.

24
Q

Core Inflation

A

The underlying increases in the consumer price index after volatile food and energy prices are removed

25
Q

Nominal income

A

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

26
Q

Real income

A

The amount of goods and services nominal income can buy.

27
Q

Unanticipated inflation

A

Increases in the price level that occur at a greater rate than expected

28
Q

Anticipated inflation

A

Increases in the price level that occur at the expected rate.

29
Q

Purchasing power

A

The amount of goods and services that a monetary unit of income can buy.

30
Q

Cost-of-living adjustment or COLA

A

An automatic increase in the income workers when inflation occurs.

31
Q

Labor union

A

A group of workers organized to advance the interests of the group to increase wages, shorten the hours worked, improve working conditions and so on.

32
Q

Subsidy

A

A payment of funds by a government, firm, or household for which receives no good or service and return; when made by government, it is a government transfer payment.

33
Q

Inflation premium

A

The component of the nominal interest rate that reflects anticipated inflation

34
Q

Real interest-rate

A

The interest rate expressed in dollars a concert value or adjusted for inflation.

35
Q

Nominal interest rate

A

The interest rate expressed in terms of annual amount currently charge for interest and not adjusted for inflation.

36
Q

Deflation

A

A decline in the economy’s price level.

37
Q

Nominal wage

A

The amount of money received by a worker per unit of time; money wage.

38
Q

Hyperinflation

A

A very rapid rise in the general price level.