AP Macroeconomics Business Cycles, Unemployment, and Inflation – Flashcards
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Consumer Price Index
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Index that measures the prices of a fixed "market basket" of some 300 goods and services bought by a "typical" consumer
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Business Cycle
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Recurring increases and decreases in the level of economic activity over periods of years; peak, trough, expansion, trough
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Peak
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Point in business cycle at which business activity has reached a temporary maximum
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Recession
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Period of declining real GDP, accompanied by lower real income and higher unemployment
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Trough
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Point at which cycle has reached temporary minimum; point at which recession ends and expansion begins
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Expansion
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Phase when real GDP, income, and employment rise
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Labor force
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Persons 16 years of age and older who are not in institutions and who are employed or are unemployed and seeking work
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Unemployment
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The failure to use all available economic resources to produce desired goods and services; failure of the economy to fully employ its labor force
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Frictional Unemployment
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Type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs
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Structural Unemployment
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Unemployment of workers whose skills are not demanded by employers, who lack sufficient skill to obtain employment, or who cannot easily move to locations where jobs are available.
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Cyclical Unemployment
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Type of unemployment caused by in sufficient total spending (or by insufficient aggregate demand)
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Inflation
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A rise in the general level of prices in an economy
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Deflation
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Decline in the economy's price level
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Demand-Pull Inflation
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Increases in the price level (inflation) resulting from an excess of demand over output at the existing price level, caused by increase in aggregate demand
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Cost-Push Inflation
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Increases in price level (inflation) resulting from an increase in resource costs and hence in per-unit production costs
