AGES-Unit 5 Study Guide - Economic Indicators

Vocabulary-style flashcards covering components of GDP, the business cycle, types of unemployment, and economic target goals based on the Unit 5 Study Guide.

Consumption (C)

Spending by households on goods and services, such as clothes.

Investment (I)

Business spending on capital goods, such as factories.

Government (G)

Spending by the government on military, schools, and infrastructure.

Net Exports (NX)

The value of a nation's exports minus its imports; it is currently negative in the U.S.

Positive impacts of a growing GDP

Includes longer life expectancy, high standard of living (Real GDP per Capita), improved literacy, and higher education.

GDP well-being limitation

GDP is not considered a good measure of well-being because it only measures the economy, not a state of well-being.

Expansion

The phase of the business cycle where GDP is increasing.

Peak

The phase of the business cycle where GDP is at its highest point.

Recession

The phase of the business cycle where GDP is decreasing.

Trough

The phase of the business cycle where GDP is at its lowest point.

Workforce

Includes all persons over age 16 who are working for pay or are actively seeking paid employment.

Unemployment Rate formula

\frac{\text{# of people unemployed}}{\text{# of people in the workforce}} \times 100

Part-time workers

Individuals working less than full time who want to work more; they are treated as fully employed, which is a sign of a weak economy.

Discouraged workers

People who stop looking for work, which causes the unemployment rate to decrease even though they are not employed.

Cyclical Unemployment

Unemployment caused by economic downturns or recessions; the goal is to keep this as close to $0$ as possible.

Structural Unemployment

Unemployment resulting from technological changes, a decline in demand for certain skills, or increased foreign competition.

Frictional Unemployment

Unemployment that occurs when workers are seeking their first job or have left one job to find another.

Seasonal Unemployment

Unemployment due to jobs that only exist at a certain time of year.

Full Employment

The most optimal level at which all available labor resources are used efficiently without triggering inflation.

Inflation

An increase in the overall price level of goods and services produced in an economy.

Demand-pull inflation

A rise in the price of goods and services caused by too much spending or an increase in overall demand.

Cost-push inflation

A rise in the price of goods and services caused by increases in the cost of the factors of production, such as oil.

Purchasing Power

The ability to buy goods and services; it increases if income rises by a greater percentage than the inflation rate.

Gross Domestic Product (GDP) Goal

Steady economic growth, specifically above $3\%$.

Unemployment Goal

Low unemployment, typically between $4\%$ and $5\%$.

Inflation Goal

Low and stable inflation at a rate of $2\%$.