Unit 3 Vocab- HNRS.ECON

• Gross Domestic Product (GDP): 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.

Chapter 13:

• 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 (CPI): 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.

Chapter 16:

• Member Bank: A bank that belongs to the Federal Reserve System.

• Interest on Reserve Balances: 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.

• Open Market Operations: When the Federal Reserve uses the buying and selling of Federal Securities to adjust the amount of money actively moving in the economy.

• 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.