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| Long-run growth framework focuses on.... |
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Definition
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| short-run business-cycle framework focuses on...... |
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Definition
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Term
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Definition
| the change in real gross domestic product (GDP) and by the change in per capita real GDP |
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| Per capita real GDP is (equation) |
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| Secular trend growth rate of the economy is |
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Definition
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| Fluctuations of real output around the secular trend growth rate are called |
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Definition
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| Phases of business cycles |
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Definition
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Term
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Definition
# of unemployed Labor Force |
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Unemployment _______ during a recession; and ______ during an expansion |
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Definition
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Term
| Target rate of unemployment is..... |
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Definition
| the lowest sustainable rate of unemployment possible under existing institutions |
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Term
| The lower the target rate of unemployment |
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Definition
| the higher an economy's potential output |
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Term
| The microeconomic approach to unemployment |
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Definition
| subdivides unemployment into categories and looks at those individual components |
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Term
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Definition
nominal output price index |
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Term
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Definition
| a continual rise in the price level |
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Term
| The CPI, the PPI, and the GDP deflator are |
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Definition
| all price indexes used to measure inflation |
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Definition
| measures inflation of all goods produced in an economy |
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Term
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Definition
| measures infaltion faced by consumers |
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Term
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Definition
| measures infaltion faced by producers |
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Term
| Inflation redistributes income from people who don't raise their prices to.... |
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Definition
| people who do raise their prices |
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Term
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Definition
| the information that prices convey |
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Term
| Expectations of inflation can |
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Definition
| cause inflation to continue |
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Term
| The range of growht rates across contries |
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Definition
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Term
During a recessionary phase of the business cycle, the macroeconomy is |
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Definition
| in between the peak and trough |
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Term
| Frictional unemployment is... |
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Definition
| unemployment caused by new entrants into the job marked and people quitting a job just long enough to look for and find another one |
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Term
| Edward has quit his job because he has become dissatisfied with the work that he has been asked to do. Because he has highly marketable skills, he expects to find a new job soon.. What type of unemployment is Edward? |
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Definition
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Term
| When the economy operates beyond potential output |
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Definition
| its operating above potential output |
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Term
| When output is at its potential |
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Definition
| unemployment and capacity utilization rates are equal to the target levels |
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Term
| Real output is best defined as... |
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Definition
| total amount of goods and services produced adjusted for changes in the price level |
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Term
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Definition
| the market value of final goods and services produced in an economy, stated in the prices of a given year |
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Term
| Main sources of economic growth |
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Definition
- Technological change and development
- capital accumulation
- increase in the availability of resources
- growth- compatible institutions
- entrepreneurship
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Term
| Benefits of economic growth |
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Definition
- Allows everyone in society, on average, to have more
- Allows governments to avoid hard distributional questions
- Generates jobs
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Term
| Cost associated with rapid economic growth |
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Definition
- pollution
- resource exhaustion
- destribution of natural habitat
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Definition
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Term
| two major economic problems associated with a downturn are...... |
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Definition
| cyclical unemployment and slow economic growth |
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Term
What is the major economic problem associated with a booming economy?? |
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Definition
| inflation; the greater and faster the spending rises, the greater and faster the economy expands and the greater the inflation rate |
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Term
| Structural unemployment is measured by |
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Definition
| institutional structure of an economy |
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Term
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Definition
| +1 percentage point change in unemployment ---> -2 percent changes in output |
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Term
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Definition
| unemployment resulting from fluctuations in economic activity |
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Term
| Structual Unemployment (definition) |
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Definition
unemployment caused by the institutional structure of an economy or by economic restructuring making some skills obsolete |
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Term
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Definition
CPI= price of market basket (in any year) X 100 price of market basket (in base year) Then subtract by 100 |
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Term
| Nominal Output (definition) |
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Definition
| the total amount of goods and services produced measured at current prices |
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Term
Nominal Output Rise (equation) *if prices rose from 8 trillion to 10 trillion.... |
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Definition
nominal output= total output (rises/decreases) base total output 10-8= .25 or 25% 8 |
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Term
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Definition
| tht total amount of goods ans services produced, adjusted for price-level changes |
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Term
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Definition
nominal output / price index percent X 100 |
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Term
| When inflation occurs nominal ouput______ than real output |
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Definition
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Term
| Classical economists believed that ________ are responsible for their own job |
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Definition
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Term
| Labor Force Participation Rate (equation) |
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Definition
labor force / # of people able to work X 100 labor force # of people able to work |
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Term
| Explain how the upturn during a business cycle differs from economic growth |
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Definition
The expansionary phase (or upturn) of a business cycle does not last long; since 1948, they have only lasted, on average, 57 months whereas economic growth lasts (and is measured) over several decades |
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