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Econ Chap6
| Question | Answer |
|---|---|
| Microeconomics | the part of the discipline of economics that deals with individual markets and firms. |
| macroeconomics | the part of the discipline of economics that deals with the economy as a whole |
| Gross domestic product (GDP) | the dollar value of all the goods and services produced for final sale in the US in a year |
| Market basket | goods that average people buy and they quantities they buy them in |
| base year | year to which all other prices are compared |
| price of the market basket in the base year | national average of the total cost of the market basket |
| price index | a device that centers the price of the market baseket around 100 |
| consumer price index (CPI) | the price based on what average consumers buy |
| inflation rate | the percentage increase in the consumer price index |
| cost-of-living adjustment | a device that compensates people for the fact that changes in inflation change the spending power of their income |
| chain-based index | a price index based on an annually adjusted market basket |
| GDP deflator | the price index used to adjust GDP for inflation, including all goods rather than a market basket |
| real gross domestic product | an inflration-adjusted measure of GDP |
| work-force | all those nonmilitary personnel who are over 17 and are employed or are employed and actively seeking employment |
| umemployment rate | the percentage of people in the work force who do not have jobs and are actively seeking them |
| unemployment | the state of working significantly below skill level or working fewer hours than desired |
| discouraged-worker effect | bad news induces people to stop looking for work, causing the unemployment rate to fall |
| encouraged-worker effect | good news induces people to start looking for work, causing the unemployment rate to rise (until they succeed in finding work) |
| cyclical unemployment | state that exists when people lose their jobs because of a temporary downturn in the economy |
| seasonal unemployment | state that exists when people lose their jobs predictably every year at the same time |
| structural unemployment | state that exists when people lose their jobs because of a change in the economy that makes their particular skill obsolete. |
| frictional unemployment | short-term unemployment during a transition to an equal or better job |
| business cycle | regular pattern of ups and down in the economy |
| trough | the lowest point in the business cycle |
| recovery | the part of the growth period of the business cycle from the trough to the previous peak |
| expansion | the part of the growth period of the business cycle from the previous peak to the new peak |
| peak | the highest point in the business cycle |
| recession | the declining period of at least two consecutive quarters in the business cycle |
| depression | severe recession typically resulting in a financial panic and bank closures, unemployment rates exceeding 20 percent, prolonged retrenchment in RGDP on the magnitude of 10 percent or more, and significant deflation |
Created by:
audmid
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