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Ch. 13 Economics Vocab.

Business Cylcles
Systematic changes in real GDP marked by alternating periods of expansion and contraction.
Business Fluctuations
Changes in real GDP marked by alternating periods of expansion and contraction that occur on an irregular basis.
Recession
Decline in real GDP lasting at least two quarters or more.
Peak
Point in time when real GDP stops expanding and begins to decline.
Trough
Point in time when real GDP stops declining and begins to expand.
Expansion
Period of uninterrupted growth of real GDP, recovery from recession.
Trend Line
Growth path the economy would follow if it were not interrupted by alternating periods of recession and recovery.
Depression
State of the economy with large number’s of unemployed, declining real incomes, overcapacity in manufacturing plants, and general economic hardship.
Depression Scrip
Currency issued by towns, overcapacity in manufacturing plants, and general economic hardship.
Leading Economic Indicator
Statistical series that normally turns downs before the economy turns down or turns up before the economy turns up.
Dow-Jones Industrial Average
Statistical series of 30 representative stocks used to monitor price changes.
Leading Economic Index (LEI)
Monthly statistical series that use a combination of ten individual indicators to forecast changes in real GDP.
Economic Model
Macroeconomic expansion used to describe how the economy is expected to preform in the future.
Inflation
Rise in the general level of prices of goods and services.
Deflation
Decrease in the general level of the prices of goods and services.
Price Index
Statistical series used to measure changes in the price level over time.
Consumer Price Index
Index used to measure price changes for a market basket of frequently used consumer items.
Market Basket
Representative collection of goods and services used to compile a price index.
Base Year
Year Serving as a point of comparison for other years in a price index or other statistical measure.
Creeping Inflation
Relatively low rate of inflation, usually 1 to 3 percent annually.
Hyperinflation
Abnormal inflation in excess to 500 percent per year; last sage of monetary policy.
Stageflation
Combination of stagnant economic growth and inflation.
Producer Price Index (PPI)
Index used to measure prices received by domestic producers; formerly called the wholesale price index.
Demand-Pull-Inflation
Explanation that prices rise because all sectors of the economy try to but more goods and services than the economy can produce.
Cost-Push-Inflation
Explanation that rising input costs, especially energy and organized labor, drive up and cost of products for manufacturers and thus cause inflation.
Creditors
Persons or institutions to whom money is owed.
Debtors
Persons or institutions that owe money.
Civilian Labor Force
Non-institutionalized part of the population aged sixteen and over either working or looking for a job.
Unemployed
State of working for less than one hour per week for pay or profit in a non-family-owned business, while being available and having mad and effort to find a job during the past month.
Unemployment Rate
Ratio of unemployed individuals divided by total Number of persons in the civilian labor force, expressed as a percentage.
Long-Term Unemployment
Workers who have been unemployed for 27 weeks or more.
Frictional Unemployment
Unemployment caused by workers changing jobs or waiting to go to new ones.
Structural Unemployment
Unemployment caused by a fundamental change in the economy that reduces the demand for some workers.
Outsourcing
Hiring outside firms to perform non-core operations to lower operating costs.
Technological Unemployment
Unemployment caused by technological developments or automation that make some workers’ skills obsolete.
Cyclical Unemployment
Unemployment directly related to swings in the business cycle.
Seasonal Unemployment
Unemployment caused by annual changes in the weather or other conditions that prevail at certain times of the year.
GDP Gap
Difference between what the economy can and does produce; annual opportunity cost of unemployed resources.
Misery Index
Unofficial statistic that is the sum of monthly inflation and the unemployment rate.
Outsourcing
Hiring outside firms to preform non-core operations to lower operating costs

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