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Chapter 23
Terms
17
Economics
12th Grade
09/19/2010

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Term
business cycle
Definition
recurring increases and decreases in the level of economic activity over periods of years
Term
recession
Definition
a period of declining real GDP, accompanied by lower real income and higher unemployment
Term
Real GDP (real gross domestic product)
Definition
gross domestic product adjusted for inflation; gross domestic product in a year divided by the GDP price index for that year, the index expressed as a decimal
Term
nominal GDP
Definition
the GDP measured in terms of the prices level at the time of measurement (unadjusted for inflation)
Term
unemployment
Definition
the failure to use all available economic resources to produce desired goods and services; the failure of the economy to fully employ its labor force
Term
inflation
Definition
a rise in the general level of prices in an economy
Term
modern economic growth
Definition
the historically recent phenomenon in which nations for the first time have experienced sustained increases in real GDP per capita
Term
savings
Definition
the accumulation of funds that results when people in an economy spend less (consume less) than their incomes during a given time period
Term
investment
Definition
in economics, spending for the production and accumulation of capital and additions to inventories
Term
financial investment
Definition
the purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) or the building of such assets in the expectation of financial gain
Term
economic investment
Definition
another word for investment
Term
expectations
Definition
the anticipations of consumers, firms, and others about future economic conditions
Term
demand shocks
Definition
sudden, unexpected changes in demand
Term
supply shocks
Definition
sudden, unexpected changes in aggregate supply
Term
inventories
Definition
goods that have been produced but remain unsold
Term
inflexible prices
Definition
"sticky prices", product prices that remain in place (at least for a while) even though supply or demand has changed
Term
flexible prices
Definition
product prices that freely move upward or downward when product demand or supply changes
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