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economics unit 5
GDP / Business Cycle / Inflation & Unemployment
| Term | Definition |
|---|---|
| Gross Domestic Product (GDP) | the market value of all final goods and services produced within a nation in a given time period |
| Nominal GDP | states GDP in terms of the current value of goods and services |
| Underground Economy | describes market activities that go unreported because they are illegal or because those involved want to avoid taxation |
| Gross National Product | the market value of all final goods and services produced by a country |
| Disposable Personal Income (DPI) | personal income minus taxes |
| Business Cycle | the series of growing and shrinking periods of economic activity, measured by increases or decreases in real GDP |
| Economic Growth | the increase in a nations real GDP over a period of time |
| Recession | a prolonged economic contraction lasting two or more quarters (6 months or more) |
| Depression | an extended period of high unemployment & reduced business activity |
| Stagflation | describes periods during which prices rise at the same time that there is a slowdown in business activity |
| Leading indicators | measures of economic performance that usually change before real GDP changes |
| unemployment rate | the %age of labor force that is jobless & looking for work |
| full employment | means no unemployment caused by decreased economic activity |
| frictional unemployment | temporary unemployment of people changing jobs |
| seasonal unemployment | unemployment linked to seasonal work |
| structural unemployment | when jobs exist but do not match the skills of available workers |
| cyclical unemployment | unemployment caused by a part of the business cycle with decreased economic activity |
| poverty threshold | the minimum income needed to pay for the basic expenses of living |
| welfare | government economic and social programs that provide assistance to the needy |
| workfare | a program that requires welfare recipients to do some kind of work |
| inflation | sustained rise in the general price level or a fall in the purchasing power of money |
| consumer price index (CPI) | a measure of changes in the prices of goods and services commonly purchased by consumers |
| Producer price index (PPI) | a measure of changes in wholesale prices |
| hyperinflation | a rapid uncontrolled rate of inflation in excess of 50 % per/month |
| deflation | a decrease in the general price level |
| demand-pull inflation | results when total demand rises faster than the production fo goods & services |
| cost-push inflation | results when increases in the costs of production push up prices |
| wage-price spiral | is a cycle that begins with increased wages, which lead to higher production costs which in turn result in higher prices, which results in demands for even higher wages |
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