Alternating periods of economic growth and contraction, wich can be measured by changes in real GDP.
Phases of business cycle?
Define the Peak businness cycle
Is where the real GDP reaches its maximun after rising during a recovery
A downturn in the business cycle, during which real GDP declines and the unemplyment rate rises. Also call contaction.
The phase in wich real GDP reaches its maximum after falling during a recession
An upturn in the cycle. Also called "expansion"
What is economic growth?
An expansion in national output measured by the annual % increase in a nation's real GDP
What are the 3 economic indicatos?
Variables that change before real GDP change
Variables that change at the same time that real GDP changes.
Variables that change after real GDP changes.
The % of people in the civilian labor force who are without jobs and are actively seeking for job
Civilian Labor Force
The # of people >16 who are employed or seeking for job. Excluding armed forces, homemakers, discourage workers etc
Formula for Unemployment rate
unemployed / civilian labor force X 100
Types of Unemployment
What is Frictional Unemployment?
Is the unemployment caused by the normal search time requiered by workers with marketable skills who are changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed.
What is Strucrural Unemployment?
Unemployment cause by a mismatch of the skills of workers out of work and the skills required for existing job opportunities.Also for changes indemand and implementations of technology.
What is Cyclical Unemployment?
Unemployment caused by the lack of jobs during a recession.
What is full Employment
The situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates. Also called the Natural rate of unemployment.
The difference between actual real GDP and potential or full-employment real DGP.
Formula: GDP gap = actual real GDP - potential real GDP