economics terms 7

national income accounting

a system that collects macroeconomic statistics on production, income, investment, and savings

Gross National Product

the total annual income earned by a nation's companies and people

aggregate demand

the amount of goods and services in the economy that will be purchased at all possible price levels

contraction

a period of economic decline marked by falling real GDP

frictional unemployment

type of unemployment that occurs when people take time to find a job

cycical unemployment

unemployment that rises during economic downturns and falls when the economy improves

full unemployment

the level of employment reached when there is no cyclical unemployment

Consumer Price Index (CPI)

a price index determined by measuring the price of a standard group of goods meant to represent the "market basket" of a typical urban consumer

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation.

Lorenz Curve

the curve that illustrates income distribution

Depreciation

the loss of the value of capital equipment that results from normal wear and tear

business cycle

a period of macroeconomic expansion followed by a period of contraction

Trough

lowest point of a contraction

leading indicators

a set of key economic variables that economists use to predict future trends in a business cycle

structural unemployment

type of unemployment that occurs when workers' skills do not match those needed for the jobs available

Globalization

the increasingly tight interconnection of producers, consumers, and financial systems around the world

discouraged workers

individuals who would like to work but have given up looking for a job

quantity theory

theory that too much money in the economy causes inflation

Gross Domestic Product (GDP)

The total value of all final goods and services produced in a country in a given year

Nomial GDP

GDP measured in current prices

Price level

the average of all prices in the economy

Real GDP per capita

real GDP divided by the total population

seasonal unemployment

unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season

unemployment rate

the percentage of the labor force that is unemployed

inflation

a general increase in prices and fall in the purchasing value of money.

wage-price spiral

the process by which rising wages cause higher prices, and higher prices cause higher wages

inflation rate

the percentage rate of change in the price level

income distribution

how the nation's total income is distributed among its population

Real GDP

Expressed in constant or unchanging prices

Aggregate Supply

the total amount of goods and services in the economy available at all possible price levels

economic growth

a steady, long-term increase in real GDP

depression

a deep recession that affects the entire economy and lasts for several years

Captial Deepening

process of increasing the amount of capital per worker

peak

the height of an economic expansion, when real GDP stops rising

Stagflation

a decline in real GDP combined with a rise in the price level