macro midterm-macroeconomic basics
real GDP
nominal GDP adjusted for price changes; nominal GDP/ GDP deflator
stagflanation
overall prices rise rapidly during periods of recessions and high unemployment
hyperinflation
period of very rapid increase in overall prices
recessions
periods during which aggregate output declines
sticky prices
prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded
aggregate output
the total quantity of goods and services produced in the economy in a given period
GDP
total market value of a county's output (all final goods and services produced within a given period of time by factors of production located within a country)
unemployment rate
unemployed/ (employed+unemployed)
cyclical unemployment
unnatural, happens in a recession or depressions
frictional unemployment
voluntary and temporary; people who voluntarily left the job but intend to return
labor force
employed + unemployed
inflation
increase in overall price level
seasonal unemployment
worker has job but is prevented by seasonal conditions from working
nominal GDP
GDP measured in current dollars- all components of GDP valued at their current prices
classical economics
believed that recessions were self-correcting, level of employment is determined by prices and wages
consumer price index (CPI)
fixed wage price index, based on now
producer price index (PPI)
index of prices that producers receive for products at all stages in the production process, not just the final stage; predicts inflation based on business
structural unemployment
involuntary and permanent; job has been eliminated due to long term changes in economy
population
labor force + not in labor force
labor force participation rate
labor force/ population
keynesian economics
level of employment determined by the level of aggregate demand for goods and services, meaning that the gov't can step in to affect the level of input and employment
GNP
measure of output produced by factors of production owned by a country's citizen regardless of where the output is produced
deflation
a decrease in overall price level