Peter test

deflation

reduction of the general level of prices in an economy

discouraged workers

a marginally attached worker who has not made specific efforts to find a job within the previous four weeks because previous unsuccessful attempts were discouraging

GDP trend line (potential GDP

typical GDP

gross domestic product GDP

dollar value of all final goods and services produced within a country's borders in 1 year

4 parts:

Consumer spending (70%)

Investment (15%)

Government spending (20%)

Net exports (exports-imports)

inflation

rising general level of prices

intermediate goods and services

goods used to produce another (rubber for cars)

labor force

anyone...

-16 years or older

-able and willing

-not in jail or hospitals

-not in military, school full time, retired

nominal wage

wage measured by dollar rather than purchasing power

real GDP

GDP based on base year prices

-adjusted for inflation

real wage

wage measured by purchasing power

unemployed

when you have no job and are actively seeking one

GDP Price Index (GDP Deflator)

(nominal GDP)/(real GDP) x 100

inflation rate (percent change)

(current CPI-base CPI)/(base CPI) x 100

Real GDP from a price index

(nominal GDP x100)/(price index)

recession

any period of two or more quarters (6 months) during which real GDP does not grow.