Chapter 5 (macro)
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22 Terms
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real gross domestic product (real GDP)
A measure of the value of all newly produced goods and services in a country during a specific period, adjusted for changes in prices over time.
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economic growth
An upward trend in real GDP, reflecting an expansion in the economy over time.
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economic fluctuations
Swings in the real GDP that cause the economy to deviate from its long-term trend.
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business cycles
The ups and downs in GDP experienced by an economy, including phases such as peak, recession, trough, expansion, and recovery.
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recession
A decline in economic activity that lasts for at least 6 months.
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peak
The highest point in real GDP before a recession.
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trough
The lowest point in real GDP at the end of a recession.
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expansion
The period between the trough of the recession and the next peak, representing a general rise in output and employment.
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recovery
The early part of an economic expansion that occurs immediately after a recession.
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depression
A prolonged and deep recession; there is no formal definition.
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unemployment rate
The percentage of the labor force that is unemployed.
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labor force
Workers who are either working (employed) or looking for work (unemployed).
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inflation rate
The percentage increase in the overall price level over a given period of time, usually one year.
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disinflation
A decline in the inflation rate.
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deflation
A negative inflation rate; occurs when the price level drops.
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interest rate
The amount received per dollar loaned per year, usually expressed as a percentage of the total loan.
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real interest rate
The interest rate minus the expected rate of inflation; it adjusts the nominal interest rate for inflation.
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nominal interest rate
The interest rate uncorrected for inflation.
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potential GDP
The long-term growth trend for real GDP within an economy, determined by the available supply of capital, labor, and technology.
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aggregate demand
The total demand for goods and services by consumers, businesses, government, and foreigners.
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supply-side policies
Economic policies that aim to increase long-term economic growth.
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demand-side policies
Economic policies that aim to influence economic fluctuations by influencing aggregate demand.
Flashcards (45)