Unit 3 Econ Vocab

Gross Domestic Product

The dollar value of all final goods and services produced in a country’s borders in a given year.

Intermediate Products

Goods and services that are used in the production of another good or service.  Also called Intermediate Goods

Real GDP

The dollar value of all final goods and services produced in a country’s borders in a given year that has been adjusted for inflation.

Current/Nominal GDP

The dollar value of all final goods and services produced in a country’s borders in a given year that has not been adjusted for inflation.  Also called Nominal GDP.

GNP (Gross National Product)

The dollar value of all final goods and services produced anywhere in the world by a country in a given year.

Net-Export of Goods and Services

The amount of exports minus the amount of imports.

Business Cycle

The idea that the economy goes through regular periods of expansion and contraction

Recession

1) A fall in a country’s GDP for a period of at least two quarters (6 months).  2) The portion of a business cycle in which GDP is declining, for this definition it can also be called contraction.

Peak

The portion of a business cycle in which GDP has stopped rising and is about to start declining.

Trough

The portion of a business cycle in which GDP has stopped declining and is about to start rising.

Expansion

The portion of a business cycle in which GDP is rising.  Also called recovery.

Depression

A dramatic decline in a country’s GDP in a short period of time or a slower decline that lasts for an extended amount of time.

Inflation

A general decrease in the purchasing power of a currency. Alternately, can be expressed as a general increase in the prices of goods. 

Deflation

A general increase in the purchasing power of a currency. Alternately, can be expressed as a general decrease in the prices of goods

Price Index

The average price of a statistically significant subset of all the goods and services in an economy.

Consumer Price Index

A tool used to measure inflation that is made up of a market basket of goods purchased by the typical urban family

Hyperinflation

Inflation that is out of control and rising rapidly.

Stagflation

A combination of rising inflation and a decrease in Gross Domestic Product.

Unemployed

When a willing worker is looking for a job and does not have a job

Labor Force

The total amount of all people in an economy who want to have a job

Frictional Unemployment

Unemployment that occurs because workers choose to change their status and make themselves unemployed

Structural Unemployment

Unemployment that occurs because changes in the economy have caused your skills to no longer match the needs of the market

Cyclical Unemployment

Unemployment that occurs because of downturns in the business cycle

Seasonal Unemployment

 Unemployment that occurs because certain jobs are not available during some portion of the year

Member Bank

A bank that belongs to the Federal Reserve System

Interest on Reserve Balances (IORB)

The amount of interest earned by banks on any money that they deposit at the Federal Reserve.

Monetary Policy

The way in which the Federal Reserve adjusts and oversees the economy

Interest Rate

The percentage of the amount borrowed that you will be charged for taking out a loan.

Discount Rate

The amount of interest charged when banks borrow money from the Federal Reserve

Prime Rate

The amount of interest charged by banks to their best customers

Federal Reserve System

The central banking system of the United States