Ch. 19 and 23

Consumer price index (CPI)

-A measure comparing the prices of consumer goods and services that a household typically purchases to the prices of those goods and services purchased in a base year. -a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. -a monthly measurement of U.S. prices for most household goods and services. It reports inflation (rising prices) and deflation (falling prices.)

Price Level

-A measure of prices in one year expressed in relation to prices in a base year. -is the average of current prices across the entire spectrum of goods and services produced in the economy. -any static picture of the price of a given good, service, or tradable security.

Stagflation

-A period of stagnating real GDP, inflation, and relatively high levels of unemployment. -persistent high inflation combined with high unemployment and stagnant demand in a country's economy. -a portmanteau of stagnation and inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high

Downturn

-A phase in the business cycle in which real GDP declines, inflation moderates, and unemployment emerges. -Unable to sustain prosperity, the economy enters its downturn phase. -a general slowdown in economic activity over a sustained period of time. .

Recession

-A phase in the business cycle in which the decline in the economy's real GDP persists for at least a half year. A recession is marked by relatively high unemployment. -a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. -when the economy declines significantly for at least six months. That means there's a drop in the following five economic indicators: real GDP, income, employment, manufacturing, and retail sales.

Prosperity

-A phase in the business cycle marked by a relatively high level of real GDP, full employment, and inflation. -An economic boom -the state of flourishing, thriving, good fortune or successful social status

Recovery

-A phase in the business cycle, following a recession, in which real GDP increases and unemployment declines. -output increases, unemployment decreases, and pressure on the economy's price level begins to build. -the phase of the business cycle following a recession, during which an economy regains

Business cycle

-Alternating periods of growth and decline in an economy's GDP. -a cycle of fluctuations in the Gross Domestic Product -It explains the expansion and contraction in economic activity that an economy experiences over time.

inflation

-An increase in the price level. -An overall increase in price -a sustained increase in the price level of goods and services in an economy over a period of time.

Real GDP

-GDP adjusted for changes in the price level. -is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). -an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices,

Nominal GDP

-GDP measured in terms of current market prices—that is, the price level at the time of measurement. (It is not adjusted for inflation.) -GDP evaluated at current market prices. -will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.

fiscal policy

-Government spending and taxation policy to achieve macroeconomic goals of full employment without inflation. -The use of government spending and taxation to make changes in the level of national income -the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.

Cost-push inflation

-Inflation caused primarily by a decrease in aggregate supply. -inflation caused by an increase in prices of inputs like labor, raw material, etc. -The increased price of the factors of production leads to a decreased supply of these goods.

Demand-pull inflation

-Inflation caused primarily by an increase in aggregate demand. -describe what happens when price levels rise because of an imbalance in the aggregate supply and demand. -Economists describe demand-pull inflation as a result of too many dollars chasing too few goods.

labor force

-People who are gainfully employed or actively seeking employment. -all the members of a particular organization or population who are able to work, viewed collectively. -also called workforce, is the population of able-bodied, willing people who are currently employed or looking for work. In other words, it's a representation of the labor pool of a certain country or segment of the economy.

frictional unemployment

-Relatively brief periods of unemployment caused by people deciding to voluntarily quit work in order to seek more attractive employment. -the idea that initial job hunting or job switching for improvement is seldom smooth or instantaneous, but quite natural in a dynamic economy. -the unemployment which exists in any economy due to people being in the process of moving from one job to another.

Depression

-Severe recession -a severe and prolonged downturn in economic activity -an extreme recession that lasts two or more years

Trough

-The bottom of a business cycle. -a low turning point or a local minimum of a business cycle. -that time period when the economy's unemployment rate is greatest and output declines to the cycle's minimum level

Macroequilibrium

-The level of real GDP and the price level that equate the aggregate quantity demanded and the aggregate quantity supplied. -a condition in the economy in which the quantity of aggregate demand equals the quantity of aggregate supply. -Meeting aggregate demand with aggregate supply as a national economic conditional activity. Prices, employment, and resources show impacts by significant movement on either side

Base year

-The reference year with which prices in other years are compared in a price index. -is used for comparison in the measure of a business activity or economic index. -the first of a series of years in an economic or financial index

Peak

-The top of a business cycle. -recovery evolves into the prosperity phase, where output reaches its maximum level -the highest point between the end of an economic expansion and the start of a contraction in a business cycle.

Aggregate demand

-The total quantity of goods and services demanded by households, firms, foreigners, and government at varying price levels. -the total demand for goods and services within a particular market. -an economic measurement of the sum of all final goods and services produced in an economy expressed as the total amount of money exchanged for those goods and services

Aggregate Supply

-The total quantity of goods and services that firms in the economy are willing to supply at varying price levels. -the total supply of goods and services that all firms in the national economy are willing to offer at varying price levels. -the total supply of goods and services available to a particular market from producers.

Gross domestic product (GDP)

-The total value of all final goods and services, measured in current market prices, produced in the economy during a year. -the total value, measured in current market prices, of all final goods and services produced in the economy during a given year. -the broadest quantitative measure of a nation's total economic activity

discouraged workers

-Unemployed people who give up looking for work after experiencing persistent rejection in their attempts to find work. -a person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment in the last four weeks -a person of legal employment age who is not actively seeking employment or who does not find employment after long-term unemployment.

cyclical unemployment

-Unemployment associated with the downturn and recession phases of the business cycle. -A kind of joblessness that is governed by the rhythms of the business cycle—increasing as the cycle moves into its recession phase and decreasing as it moves out. -a factor of overall unemployment that relates to the regular ups and downs, or cyclical trends in growth and production, that occur within the business cycle.

structural unemployment

-Unemployment that results from fundamental technological changes in production, or from the substitution of new goods for customary ones. -unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand. -a longer-lasting form of unemployment caused by fundamental shifts in an economy and exacerbated by extraneous factors such as technology, competition, and government policy.

underemployed workers

-Workers employed in jobs that do not utilize their productive talents or experience. -when one does not have a job that is full-time or that reflects his or her training and financial needs. -a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience, and availability to work.

full employment (as defined by the Bureau of Labor Statistics)

an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its potential.