a reference point for comparing data over time, setting a benchmark (often with an index value of 100) to measure changes in economic factors

the natural, recurring fluctuation of economic activity over time, characterized by four distinct phases: expansion, peak, contraction, and trough

Circular Flow Diagram

The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents.

The commonly used measurement of inflation for consumers

Cyclical Unemployment

Unemployment caused by a recession

Decrease in general prices or a negative inflation rate.

Some people are no longer looking for a job because they have given up.

Prices are increasing at slower rates.

The percent of people in the labor force who want a job but are not working

Expenditures Approach

Add up all the spending on final goods and services produced in a given year.

Frictional Unemployment

Temporary unemployment or being between jobs

Structural Unemployment

Changes in the labor force make some skills obsolete.

The Real GDP created when there is no cyclical unemployment

a comprehensive economic metric measuring inflation by comparing nominal GDP to real GDP

Gross Domestic Product

The dollar value of all final goods and services produced within a country in one year

Inflation is the rising general level of prices and it reduces the “purchasing power” of money.

Labor Force Participation Rate

Percent of population in the labor force.

People who lend money (at fixed interest rates).

Natural Rate of Unemployment

Frictional plus structural unemployment. The amount of unemployment that exists when the economy is healthy and growing.

the total market value of all final goods and services produced in a country within a specific period, calculated using current market prices, without adjusting for inflation or deflation

an inflation-adjusted measure that reflects the value of all goods and services produced in a specific year, expressed in constant prices

Index numbers assigned to each year that show how prices have changed relative to a specific base year.

the lowest point in a business cycle, marking the end of a recession and the transition to recovery

As prices increase for the fixed market basket, consumers buy less of these products and more substitutes that may not be part of the market basket.

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AP Macro Vocab

Term	Definition
Base Year	a reference point for comparing data over time, setting a benchmark (often with an index value of 100) to measure changes in economic factors
Borrowers	People who borrow money.
Business Cycle	the natural, recurring fluctuation of economic activity over time, characterized by four distinct phases: expansion, peak, contraction, and trough
Circular Flow Diagram	The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents.
Consumer Price Index	The commonly used measurement of inflation for consumers
Cyclical Unemployment	Unemployment caused by a recession
Deflation	Decrease in general prices or a negative inflation rate.
Discouraged Workers	Some people are no longer looking for a job because they have given up.
Disinflation	Prices are increasing at slower rates.
Unemployment	The percent of people in the labor force who want a job but are not working
Expenditures Approach	Add up all the spending on final goods and services produced in a given year.
Frictional Unemployment	Temporary unemployment or being between jobs
Structural Unemployment	Changes in the labor force make some skills obsolete.
Full Employment	The Real GDP created when there is no cyclical unemployment
GDP Deflator	a comprehensive economic metric measuring inflation by comparing nominal GDP to real GDP
Gross Domestic Product	The dollar value of all final goods and services produced within a country in one year
Inflation	Inflation is the rising general level of prices and it reduces the “purchasing power” of money.
Labor Force Participation Rate	Percent of population in the labor force.
Lenders	People who lend money (at fixed interest rates).
Natural Rate of Unemployment	Frictional plus structural unemployment. The amount of unemployment that exists when the economy is healthy and growing.
Nominal GDP	the total market value of all final goods and services produced in a country within a specific period, calculated using current market prices, without adjusting for inflation or deflation
Real GDP	an inflation-adjusted measure that reflects the value of all goods and services produced in a specific year, expressed in constant prices
Price Indices	Index numbers assigned to each year that show how prices have changed relative to a specific base year.
Troughs	the lowest point in a business cycle, marking the end of a recession and the transition to recovery
Substitution Bias	As prices increase for the fixed market basket, consumers buy less of these products and more substitutes that may not be part of the market basket.

Created by: catherinehudicourt

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