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Flashcards in Economic Performance Test Deck (36):
1

Define Business Cycle

Series of growing and shrinking periods of economic activity
-measured in increases or decreases in real GDP

2

Define Consumer Price Index

Measure of changes in the prices of goods and services commonly purchased by consumers

3

Define Durable Good

Good that does not wear out or go away quickly

4

Define GDP

The market value of all final goods and services produced in a nation in a given time period.
-Must be final
-Produced in given time period
-Produced within a nation's borders

5

Define inflation

A sustained rise in the level of prices and a sustained fall in the purchasing power of money

6

Define net Exports

Goods and services produced in the nation but sold in foreign nations, minus value of imports.

7

Define Non-Durable goods

Goes away quickly; perishable

8

Define Productivity

Amount of output produced from a set amount of inputs
-Refers to the quantity of goods and services a worker can produce for each hour of work
-Increases when the same amount of inputs produce more output

9

Define Real GDP

GDP corrected for changes in prices from year to year
-Estimate of GDP if prices remained constant
-More accurate measure of economic performance
-Good indicator of how well a Country's resources are being utilized

10

Define REal GDP Per Capita

Real GDP divided by population
-reflects each person's share of real GDP

11

Define Underemployment

-Part time workers who want full time jobs
-people working below their skill levels
-laid off workers who are temporary, lower paying jobs

12

Define Unemployment Rate

Percentage of the labor force that is jobless and looking for work

13

How is economic growth measured?

percentage changes in GDP
-Dependent upon quality/quantity of resources

14

What does GDP measure?

The market value of all final goods and services produced in a nation in a given time

15

What are the four components of GDP?

-Consumption
-Investments
-Government Spending
-Net Exports

16

How do you calculate GDP?

Consumption+Investments+Government spending+Net Exports=GDP

17

What items are not included in GDP?

Personal Investments

18

What are the requirements of GDP?

-Has to be final product or service
-Must be produced in a given time period
-Must be produced within a nation's borders

19

What is the usual measure of a nation's standard of living?

Real GDP per capita, not quality of life

20

How does productivity increase?

When the same amount of inputs produce more output

21

What are the effects of inflation?

-Decreases value of dollar bill
-Increases interest rates
-Decreases real return on savings

22

How is the labor force for each nation calculated?

Adding the number of people over 16 who are employed or actively looking for work

23

How is the unemployment rate calculated?

The percentage of the labor force that is jobless and looking for work

24

What are the 4 types of unemployment?

-Frictional
-Seasonal
-Structural
-Cyclical

25

What are the four parts of the business cycle?

-Expansion
-Peak
-Contraction
-Trough

26

What is the difference between a depression and a recession?

A depression is an extended period of high unemployment and reduced business activity
A recession is a contraction lasting two or more quarters

27

What is the lowest point of the business cycle?

The trough

28

What is the highest point of the business cycle?

the peak

29

Describe Frictional unemployment

-Temporary unemployment because one is changing jobs
-Reflects worker's freedom to find work that best suits them at the highest wage possible

30

Describe Seasonal unemployment

Linked to the changing of seasons
-Ex:
Construction, migrant and farm jobs, tourism

31

Describe Structural unemployment

Situation in which the job exists, but no one can fill it
Possible causes: New technology replaces workers, new industries require specialized education

32

Describe Cyclical unemployment

Caused by part of the business cycle with decreased economic activity
-follows business cycle, typically in contraction phase

33

Explain expansion of the business cycle

a period of economic growth or increase in a nation's real GDP over time
-Low unemployment
-More resources and higher prices

34

Explain peak of the business cycle

GDP is at its highest
-Resources are tightened due to rising prices
-Businesses lose some profits and cut production

35

Explain contraction of the business cycle

Economic slowdown or decline
-Producers cut back
-Resources become scarce
-Prices stabilize

36

Explain trough of the business cycle

The point at which GDP and unemplyment stop declining
-Cycle complete