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  1. Business Cycle
    • -Alternating periods of economic growth and contraction
    • -measured by changes in real GDP
  2. Peak
    • -phase of business cycle
    • -real GDP reaches max after rising during a recovery
  3. Recession (Contraction)
    • -downturn in business cycle
    • -real GDP declines
    • -unemployment rate rises
  4. Trough
    • -phase in business cycle
    • -real GDP reaches min after falling during a recession
  5. Recovery (Expansion)
    • -upturn in the business cycle
    • -real GDP rises
  6. Economic Growth
    -expansion in national output measured by annual percentage increase in a nation's real GDP
  7. Leading Indicators
    -variables that change before real GDP changes
  8. Coincident Indicators
    -Variables that change at the same time that real GDP changes
  9. Lagging indicators
    -Variables that change after real GDP changes
  10. Unemployment Rate
    -the % of people in the civilian labor force who are without jobs and actively seeking them
  11. Civilian Labor Force
    • -number of people ages 16 and older who are employed or who are actively seeking a job
    • -excludes armed forces, homemakers, discouraged workers, and other persons not in the labor force
  12. Discouraged Worker
    -a person who wants to work, but who has given up searching for work because he or she believes there will be no job offers
  13. Frictional Unemployment
    • -Unemployment caused by the normal search time required by worked with marketable skills
    • -changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed
  14. Structural Unemployment
    -Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities
  15. Cyclical Unemployment
    -Unemployment caused by the lack of jobs during a recession
  16. Full Unemployment (Natural Rate)
    -economy operates at an unemployment rate equal to the sum of frictional + structural unemployment rates
  17. GDP gap
    Difference between actual real GDP and potential or full-employment real GDP
  18. Inflation
    an increase in the general (avg) price level of goods and services in the economy
  19. Deflation
    -a decrease in the general (avg) price level of goods and services in the economy
  20. Consumer Price Index (CPI)
    -measures changes in the average prices of consumer goods and services
  21. Base Year
    a year chosen as a reference point for comparison with some earlier or later year
  22. Disinflation
    a reduction in the rate of inflation
  23. Nominal Income
    the actual number of dollars received over a period of time
  24. Real Income
    the actual number of dollars received (nominal income) adjust for changes in the CPI.
  25. Wealth
    the value of the stock of assets owned at some point in time
  26. Nominal Interest Rate
    the actual rate of interest without adjustment for the inflation rate
  27. Real Interest Rate
    the nominal rate of interest minus the inflation rate
  28. Adjustable-Rate Mortgage (ARM)
    a home loan that adjusts the nominal interest rate to the changes in an index rate, such as rates on Treasury securities
  29. Demand-pull Inflation
    a rise in the general price level resulting from an excess of total spending (demand)
  30. Cost-push Inflation
    an increase in the general price level resulting from an increase in the cost of production
  31. Hyperinflation
    an extremely rapid rise in the general price level
  32. Wage-price Spiral
    a situation that occurs when increases in nominal wage rates are passed on in higher prices which in turn results in even higher nominal wage rates and prices
Card Set:
2013-03-28 03:56:07

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