Econ Ch 8

Increase in real GDP or increase in real GDP per capita

Dividing real GDP by the size of the population then compared in percentage terms with that of the previous period

Quantitative grasp of the effect of economic growth (how long will it take to double)

Measured broadly as real output per unit of input

Alternating rises and declines in the level of economic activity

Business activity has reached a temporary maximum

A period of decline in total output, income, employment, and trade

Lowest levels of the recession

Output and employment rise toward full employment

Consists of people who are able and willing to work

Percentage of the labor force unemployed (unemployed ÷ labor force × 100)

Unsuccessful seeking employment for a time and drop out of the labor force

Search/wait unemployment

Changes over time in consumer demand and in technology alter total demand of labor, both occupationally and geographically

Deficient-demand; decline in total spending and is likely to occur in the recession phase

Unemployment rate occuring when there is no cyclical employment of the labor force

When expected inflation equals actual inflation

The real output (GDP) an economy can produce when it fully employs its avaliable resources

Sacrifice of output; the difference between actual and potential GDP

For every 1 percentage point by which the actual unemployment rate exceeds the natural rate, a negative GDP gap of about 2 percent occurs

Rise in the general level of prices; reduces the "purchasing power" of money

Main measure of inflation; measures the prices of a fixed "market basket" of some 300 goods and services bought by a "typical"consumer

When resources are already fully employed, the business sector cannot respond to excess demand by expanding output, so it bids up the prices of limited output

Increases in the price level resulting from an increase in resource cost

Average cost of a particular level of output; found by dividing the total cost of all resource inputs by the amount of output produced

Number of dollars received as wages, rent, interest, or profits

Measure of the amount of goods and services nomial income can buy; (nominal income ÷ price index)

Fully expected, an income receiver may be to avoid or lessen the adverse effects of inflation or real income

Inflation whose full extent was not expected

An automatic increase in the income of workers when inflation occurs

Percentage increase in purchasing power that the borrower pays the lender

Percentage increase in money that the borrower pays the lender, including simultaneously hurt and benefited by inflation

Declines in the price level

Extremely rapid inflation whose impact on real output and employment is usually devastating