Chap 13 Economics
business fluctuations
changes in real GDP marked by alternating periods of expansion and contraction that occur on an irregular basis
Stagflation
combination of stagnant economic growth and inflation
depression scrip
currency issued by towns, chamber of commerce, and other civic bodies during the Great Depression of the 1930s
recession
decline in real GDP lasting at least two quarters or more
GDP gap
difference between what the economy can and does produce
demand-pull inflation
explanation that prices rise because all sectors of the economy try to buy more goods and services than the economy can produce
cost-push inflation
explanation that rising input costs, especially energy and organized labor, drive up the prices of products
trend line
growth path the economy would follow if it were not interrupted by alternating periods of recession and recovery
Outsourcing
hiring outside firms to perform non-core operations to lower operating costs
Consumer Price Index (CPI)
index used to measure price changes for a market basket of frequently used consumer items
implicit GDP price deflator
index used to measure price changes in gross domestic product
Producer Price Index (PPI)
index used to measure prices received by domestic producers
economic model
macroeconomic expression used to describe how the economy is expected to perform in the future
leading economic index (LEI)
monthly statistical series that uses a combination of ten individual indicators to forecast changes in real GDP
civilian labor force
noninstitutionalized part of the population, aged 16 and over, either working or looking for a job
expansion
period of uninterrupted growth of real GDP, industrial production, real income, and employment lasting for several years or more; recovery from recession
debtors
persons or institutions that owe money
creditors
persons or institutions to whom money is owed
trough
point in time when real GDP stops declining and begins to expand
peak
point in time when real GDP stops expanding and begins to decline
unemployment rate
ratio of unemployed individuals divided by total number of persons in the civilian labor force, expressed as a percentage
creeping inflation
relatively low rate of inflation, usually 1 to 3 percent annually
market basket
representative collection of goods and services used to compile a price index
depression
state of the economy with large numbers of unemployed, declining real incomes, overcapacity in manufacturing plants, and general economic hardship
unemployed
state of working for less than one hour per week for pay or profit in a non-family-owned business, while being available and having made an effort to find a job during the past month
leading economic indicator
statistical series that normally turns down before the economy turns down or turns up before the economy turns up
price index
statistical series used to measure changes in the price level over time
deflation
sustained decrease in a general level of prices of goods and services
inflation
sustained rise in the general level of prices of goods and services
business cycle
systematic changes in real GDP marked by alternating periods of expansion and contraction
structural unemployment
unemployment caused by a fundamental change in the economy that reduces the demand for some workers
seasonal unemployment
unemployment caused by seasonal changes in the demand for certain kinds of labor
technological unemployment
unemployment caused by technological developments or automation that make some workers' skills obsolete
cyclical unemployment
unemployment directly related to swings in the business cycle
frictional unemployment
unemployment that occurs when people take time to find a job
misery index
unofficial statistic that is the sum of monthly inflation and the unemployment rate
long-term unemployed
workers who have been unemployed for 27 weeks or more
base year
year serving as point of comparison for other years in a price index or other statistical measure
Hyperinflation
abnormal inflation in excess of 500% per year; last stage of monetary collapse
Dow Jones Industrial Average
an index of 30 representative stocks used to monitor price changes in the overall stock market
