CH 19 Flashcards
(24 cards)
Define Business Cycle
Short term fluctuations in economy cuz changes in activity
Define Peak
Near full employment & real output / PL rise?
Define Recession
Decline tot output, income & employment / 6+ months
Define Trough
Output & employment lowest / short & long
Define Expansion
RealGDP, Income & employment increase / inflation?
Define Demand Shock
Unexpected changes in Dem for G/S
Define Supply Shock
Unexpected changes in Sup for G/S
Define Sticky Prices
Price slow to change
Labor force includes…
employed & unemployed
Who not included Labor force?
Under 16 / Institutionalized (Prison, Mental H) / Out of work for < 1 week / Within 4 weeks lookin for job
Define employed peeps.
Full/Part time
Define Unemployed peeps
No job for week but looking within the past 4 weeks
Define Frictional Unemployment
searching/waiting for jobs
Define Structural Unemployment
has skills not needed by firms in economy
Define Cyclical Unemployment
fluctuations in Business cycle / Only Economist care abt
Unemployment Rate Equation
U-Rate = # unemployed / labor force, then multiply by 100
What is the Natural Rate?
Frictional + Structural unemployment rate
Raise Wage - ??
More people want job, but less are needed.
Lower Wage - ??
More people are needed, but less want it.
Define inflation
General increase of prices
Define CPI
Measures avg price of market basket of G/S
CPI Major groups
Food & Bev / Housing / Apparel / Transport / Medical Core / Recreation / Education / Communication
Equation for CPI (EX: Yr 1)
CPI Yr 1 = Yr 1 / Base Yr then multiply by 100
Equation for Inflation Rate Yr (EX: Yr 2)
IRY (2) = Y2 - Y1 / Y1 then multiply by 100
