ch 14 econ

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Business cycle
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largely systematic ups and downs of real gdp
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Business Fluctuation
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Rise and fall of real GDP over time in a nonsystematic manner.
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Recession
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period in which real GDP declines consecutively for 2 quarters (6 months)
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Peak
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when expansion ends, point where real GDP stops going up
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Trough
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recession ends, turn around point when real GDP stops going down
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Expansion
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period of recovery from a recession
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Trend Line
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line the economy would follow without recession and expansion.
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Depression
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state of the economy with large numbers of people out of work, acute shortages and excess
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recession and expansion
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2 phases of business cycles.
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unbalanced income distribution, easy and plentiful borrowing, global economic conditions, high american tariffs on imports
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4 causes of great depression
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capital expenditures, inventory adjustments, innovation and imitation, monetary factors, and external shocks
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5 causes of business cycles
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Unemployed
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people available for work who made a specific effort to find a job during the past month and who, during the most recent survey week, worked less than one hour for pay
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frictional, structural, cyclical, seasonal, technological
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5 types of unemployment
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Frictional Unemployment
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workers between jobs (short term)
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Structural Unemployment
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umemployment that occurs when workers’ skills do not match the jobs that are available
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Cyclical Unemployment
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those persons that have become unemployed due to a downturn in the business cycle.
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Seasonal Unemployment
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unemployment resulting from changes in the weather or demand.
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Technological Unemployment
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unemployment caused when workers with less skills, talent, or education are replaced by machines and other equipment that do their jobs
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full employment
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the lowest possible unem rate with economy growing and all factors of production being used as efficiently as possible
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Deflation
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Contraction of economic activity resulting in a decline of prices.
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Creeping, galloping, and hyperinflation
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3 degrees of inflation
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Lorenz Curve
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curve that shows how much the actual distribution varies from an equal distrobution
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select market basket of goods and then construct price index like cpi, ppi, or implicit gdp price deflator
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measuring inflation
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change in price lvl/beginning price index X 100
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inflation rate equation
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census
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official count of a population
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econ sectors buy more goods than econ makes, fed govt deficit spends, rising input costs, unexpected ^ in cost of nonlabor inputs, spiral of wages and prices, excessive monetary growth
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6 causes of inflation
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dollar buys less and loses value, change of spending habits which disrupts econ, alters income distribution, tempts ppl to spend heavy
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consequences of inflation
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distribution of income
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measured by ranking family incomes from lowest to highest and dividing the ranking into quintiles.
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education, wealth, discrimination, ability, monopoly power
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5 income inequality factors
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change in econ as industry changes, gap b/t worker’s skills gap, decline of unionism, american family changing
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4 causes of spreading poverty
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income assistance, general assistance, social service programs, earned income tax credit, enterprise zones, workfare programs, and negative income tax
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7 antipoverty programs

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