Unit 4 Key Terms Part 3

Question 1

the market value of all final goods and services produced within a country during a given period of time

Answer 1

Gross Domestic Product

Question 2

the price buyers are willing to pay for a good or service in a competitive market

Answer 2

Market Value

Question 3

any new good that is ready for consumer use; final goods are included in the calculation of GDP

Answer 3

Final Good

Question 4

a good used in the production of a final good; intermediate goods are not included in the calculation of GDP

Answer 4

Intermediate Goods

Question 5

the value of all exports minus all imports

Answer 5

Net Export

Question 6

a measure of a country’s economic output (GDP) valued in current dollars; nominal GDP does not reflect the effects of inflation

Answer 6

Nominal GDP

Question 7

the value of a dollar in the year it is spent; a measure of the dollar’s value that reflects current purchasing power, without taking inflation into account

Answer 7

Current Dollars

Question 8

a measure of a country’s economic output (GDP) valued in constant dollars; real GDP reflects the effects of inflation

Answer 8

Real GDP

Question 9

the value of the dollar fixed at a specified base year; a measure of the dollar’s value adjusted for inflation to reflect purchasing power over time

Answer 9

Constant Dollars

Question 10

a nation’s real GDP divided by its population; a measure of average economic output per person

Answer 10

Per Capita GDP

Question 11

the percentage of people in a country who can read and write

Answer 11

Literacy Rate

Question 12

the number of years, on average, that a person is expected to live; a key indicator of a nation’s health and well-being

Answer 12

Life Expectancy

Question 13

the rate at which babies die during their first year of life; a key indicator of a nation’s health and well-being

Answer 13

Infant Mortality

Question 14

the percentage of the labor force that is not employed but is actively seeking work

Answer 14

Unemployment Rate

Question 15

a type of unemployment that results when workers are seeking their first job or have left one job and are seeking another

Answer 15

Frictional Unemployment

Question 16

a type of unemployment that results when the demand for certain skills declines, often because of changes in technology or increased foreign competition; under such conditions, workers may need retraining to find new jobs

Answer 16

Structural Unemployment

Question 17

a type of unemployment that results when businesses shut down or slow down for part of the year, often because of weather

Answer 17

Seasonal Unemployment

Question 18

a type of unemployment that results from a period of decline in the business cycle; unemployment caused by a contraction

Answer 18

Cyclical Unemployment

Question 19

the percentage of the labor force without work when the economy is at full employment; a condition in which the economy is strong and there is no cyclical unemployment

Answer 19

Natural Rate of Unemployment

Question 20

unemployed workers who have ceased to look for work; discouraged workers are not considered part of the labor force and are not factored into the unemployment rate

Answer 20

Discouraged Workers

Question 21

people who settle for part-time employment because they are unable to find full-time work

Answer 21

Involuntary Part-Time Workers

Question 22

a sector of the economy based on illegal activities, such as drug dealing and unlawful gambling

Answer 22

Underground Economy

Question 23

the percentage increase in the average price level of goods and services from one month or year to the next

Answer 23

Inflation Rate

Question 24

a measure of the average change in price of a type of good over time

Answer 24

Price Index

Question 25

a measure of price changes in consumer goods and services over time; the CPI shows changes in the cost of living from year to year

Answer 25

Consumer Price Index

Question 26

a measure of change in the overall cost of goods and services; another term for the consumer price index

Answer 26

Cost-of-Living Index

Question 27

the cost in current dollars of all the basic goods and services needed by the average consumer

Answer 27

Nominal Cost of Living

Question 28

the cost in constant dollars of all the basic goods and services needed by the average consumer; the nominal cost of living adjusted for inflation

Answer 28

Real Cost of Living

Question 29

wage levels based on current dollars

Answer 29

Nominal Wages

Question 30

wage levels based on constant dollars; nominal wages adjusted for inflation

Answer 30

Real Wages

Question 31

a gradual, steady rise in the price of goods and services over time

Answer 31

Creeping Inflation

Question 32

a fall in the price of goods and services; the opposite of inflation

Answer 32

Deflation

Question 33

a downward trend in prices, wages, and business activity; a deflationary pattern in which falling prices cause a business slow-down, which in turn leads to lower wages, a further fall in prices, and even less business activity

Answer 33

Deflationary Spiral

Question 34

a rise in the price of goods and services caused by an increase in overall demand

Answer 34

Demand-Pull Inflation

Question 35

a recurring pattern of growth and decline in economic activity over time

Answer 35

Business Cycle

Question 36

a period of economic growth

Answer 36

Expansion

Question 37

the highest point of an expansion, or period of economic growth; a peak is followed by economic decline

Answer 37

Peak

Question 38

a period of general economic decline marked by falling GDP and rising unemployment

Answer 38

Contraction

Question 39

the lowest point of a contraction, or period of economic decline; a trough is followed by economic growth

Answer 39

Trough

Question 40

measures that consistently rise or fall several months before an expansion or a contraction begins

Answer 40

Leading Economic Indicators

Question 41

measures that consistently rise or fall several months after an expansion or contraction begins

Answer 41

Lagging Economic Indicators

Question 42

a period of declining national economic activity, usually measured as a decrease in GDP for at least two consecutive quarters (six months)

Answer 42

Recession

Question 43

merchandise that companies or stores have on hand

Answer 43

Inventory

Question 44

a prolonged economic downturn characterized by plunging real GDP and extremely high unemployment

Answer 44

Depression

Question 45

a sector of the economy that operates without government regulation or monitoring and is not officially recorded or taxed; the informal economy is not included in the calculation of GDP

Answer 45

Informal Economy

Question 46

a rise in the price of goods and services caused by an increase in overall demand

Answer 46

*Demand-Pull Inflation*

Question 47

an upward trend in wages and prices; an inflationary pattern in which rising prices lead to demands for higher wages, causing producers to raise prices further and workers to demand additional wage hikes

Answer 47

Wage-Price Spiral

Question 48

a rise in the price of goods and services caused by increases in the cost of the factors of production

Answer 48

*Cost-Push Inflation*