Economics Lecture Review

A set of vocabulary flashcards to help review key concepts in Economics related to GDP, unemployment, inflation, and associated formulas.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a given period.

Frictional Unemployment

Short-term unemployment that occurs when people are between jobs; considered a natural turnover.

Structural Unemployment

Unemployment due to a mismatch between skills and available jobs, which can last longer than frictional unemployment.

Cyclical Unemployment

Unemployment that occurs during economic downturns, considered 'extra' unemployment.

Unemployment Rate

Calculated as the number of unemployed individuals divided by the labor force, multiplied by 100.

Interest Rate Effect

The phenomenon where a rise in the price level leads to increased interest rates due to a higher demand for money.

Business Cycle

The fluctuation of economic activity in phases: Expansion, Peak, Contraction, Trough, and Recovery.

Nominal GDP

GDP measured at current market prices, not adjusted for inflation.

Real GDP

GDP that is adjusted for inflation, reflecting the true value of goods and services produced.

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of consumer goods and services, used to assess inflation.

Labor Force Participation Rate (LFPR)

The ratio of the labor force to the working-age population, expressed as a percentage.

Disinflation

A decrease in the rate of inflation, meaning prices are still rising but at a slower rate.

Deflation

A decrease in the general price level of goods and services, resulting in a negative inflation rate.

Adjustment of Wages

Real Wage calculation: Nominal Wage adjusted for inflation using the CPI to compare purchasing power over time.

CPI and Inflation

Rising CPI indicates inflation; falling CPI indicates deflation; slower CPI growth indicates disinflation.