Unit 4 vocab economics

Coincident indicator

An indicator that provides information regarding changes in the economy at the same time as they occur in the economic cycle.

Consumer price index

A measure of the average change in the price of selected range (basket) of consumer goods and services

Deflation

The sustained decrease in the general level of prices over a period of time, measured by a decrease in the consumer price index

Headline inflation

The percentage change in the prices over time as measured by the consumer price index; also reffered to as consumer price index

Lagging indicator

An indicator that provides information regarding changes in the economy before they occer in the economic cycle

Leading indicator

An indicator that provides information regarding changes in the economy before they occur in the economic cycle

Marginal propensity to consumer

The proportion of an increase in income that is spent on consumption

Marginal propensity to save

The proportion of an increase in income that is saved rather than spent on consumption.

Nominal GDP

The value of final outpit of an economy’s goods and services expressed in current prevailing prices with no adjustments for the effects of inflation

Non - accelerating inflation rate of unemployment

The natural unemployment rate

The percentage of the labour force that is unemployed when the labour market is in equilibrium

Includes frictional, structural and long term unemployment

Price stability

A state of the economy in which there is little variation in prices; that is there is low inflation

Real GDP

The value of final output of an economy’s goods and service adjusted for the effects of inflation

Stagflation

Situation in which inflation exists simultaneously with low levels of economic activity

The multiplier process

A more than proportional change in the equilibrium level of national income resulting from a change in autonomous expenditure

Underlying inflation

The headline rate of inflation excluding one off or seasonal factors that cause short term volatiliy in the prices measures by the headline rate (example: changes in tax, fluctuation in petrol prices)

Unemployment rate

The percentage of labour force that is unemployed