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Definition
| An increase in the general price level of goods and services |
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Definition
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| A decrease in the general price level of goods and services |
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| A reduction in the rate of inflation |
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| One of the three measures of inflation which is calculated by (Nominal GDP/Real GDP) x 100 |
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Definition
| A sector in the Basic Circular model that contribute by supplying factors of productions to business and take part in consumption |
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| A sector in the Basic Circular model that contribute by giving income to households and sell goods and services |
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| Money that is more or less unwillingly taken out from households. Consists of: Savings, Taxes, Imports |
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| Money that businesses receive originating from leakages |
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Definition
| Value of final output produced in a given period measured in the prices of that period |
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Definition
| Value of final output produced in a given period adjusted for changing prices |
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Definition
| The highest point on a graph showing Real GDP vs. Time |
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| The lowest point on a graph showing Real GDP vs. Time. Signifies the end of a Recession A decline in real GDP that continues for at least two consecutive quarters |
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Term
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Definition
| GDP Inflator, Producer Price Index, Consumer Price Index |
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Definition
| A period where GDP increases reflected on a business cycle |
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Term
| Calculating the Inflation Rate |
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| GDP Inflator (2012) - GDP inflator (2011)/ GDP inflator(2011) |
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Definition
| Number of unemployed / labor force |
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Term
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Definition
| Non-institutionalized people in the adult population |
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Definition
| Citizens who want a job and are actively looking for one. Currently have no source of income |
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| Unemployment due to people moving between jobs or into the labor market |
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Term
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Definition
| Unemployment caused by changes in labor demand during times of the year |
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| Unemployment caused by a mismatch in skills or geographical location |
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| Unemployment caused by the reduction of labor during a recession |
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Definition
| Working in a place requiring skills lower than the ones you have acquired |
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Term
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Definition
| When the unemployment rate is between 4 - 6% |
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Term
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Definition
| Inflation resulting from increases in aggregate demand |
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Term
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Definition
| Inflation resulting from decreases in aggregate supply |
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| Consequences of Inflation |
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Definition
| Price Effect, Income Effect, Wealth Effect |
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Term
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Definition
| "Father of modern ecomonics". One of the most influential economists who found the Cross Model |
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Term
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Definition
| An economic model with a focus on Aggregate Spending with multiple potential equilibriums |
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| Consumption independent of income |
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Term
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| Consumption determined by disposable income |
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| Marginal Propensity to Consume |
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| The fraction of each additional dollar of disposable income spent on consumption. Also the slope of the consumption function |
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Definition
| Equation for the Keynesian Cross equilibrium line. Any point on this line is a potential equilibrium. Axises on the graph are y- spending and x-income |
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| Determinants of Investment |
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Definition
| Market Interest rate and business expectations |
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Term
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Definition
| The amplified effect of a change in autonomous spending on the equilibrium level of income |
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