Econ Ideas - Economic Measures (Unit 5)

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Section 1

Question Answer
UnemploymentThe number of people without jobs who are actively seeking work.
Unemployment RateThe number of unemployed people, expressed as a percentage of the labor force.
Labor ForceThe people in a nation who are aged 16 or over and are employed or actively looking for work.
Cyclical UnemploymentUnemployment caused by fluctuations in the overall rate of economic activity or phase of the business cycle.
Seasonal UnemploymentUnemployment caused by job loses during a particular season.
Frictional UnemploymentUnemployment caused by the short-term movement of people between jobs and by first-time job seekers entering the labor force; always present in a dynamic economy.
Full EmploymentThe natural rate of employment; generally considered to be about 93-95 percent of the labor force, allowing for frictional unemployment of 5-7 percent.
Structural UnemploymentThe type of unemployment resulting from people's present abilities, skills, training and location not matching up with available job openings that reflect the basic structure of the economy.

Section 2

Question Answer
Gross Domestic Product (GDP)The market value of all final goods and services produced in a country in a calendar year.
Government SpendingSpending by all levels of government on goods and services; includes categories like military, schools and roads.
ConsumptionSpending by households on goods and services. The process of buying and using goods and services.
Investment The purchase of capital goods (including machinery, technology or new buildings) that are used to produce goods and services.
Net ExportsExports minus imports.
Real Gross Domestic Product (GDP)GDP measured in dollars of constant purchasing power.
Aggregate Demand (AD)A schedule (or graph) that shows the value of output (real GDP) that would be demanded at different price levels.
Aggregate Supply (AS)A schedule (or graph) that shows the value of output (real GDP) that would be produced at different price levels.
Business CycleFluctuations in overall output and employment, normally lasting for several years.
RecessionA decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).
DepressionA severe, prolonged economic contraction.

Section 3

Question Answer
InflationA rise in the general or average price level of all the goods and services produced in an economy.
Cost-push inflationInflation caused by rising costs of production.
Demand-pull inflationInflation caused by increasing demand for output or "too much money chasing too few goods."
DeflationA sustained decrease in the average price level of all the goods and services produced in the economy.
Inflation rateInflation as measured by the percent change in CPI from one year to the next.
Fiat MoneyCurrency that a government has declared to be legal tender.
Commodity MoneyMoney whose value comes from an object that has value itself.
Representative MoneyAn item or token that has no value, but can be exchanged on demand for something that does have value.
Consumer Price Index (CPI)A price index that measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period.
MoneyAnything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.
Medium of ExchangeUsing money to exchange goods and services to avoid pure bartering.
Store of ValueUsing money to save and retrieve at a later time.
Standard of ValueUsing money to set uniform prices for goods and services.