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Gov. Econ. vocab 10-28

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Purchasing Power
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a.)Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. b.)Purchasing power is important because, all else being equal
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Deflation
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a.)Deflation is a general decline in prices, often caused by a reduction in the supply of money or credit. b.)Deflation can be caused also by a decrease in government,
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Consumer Price Index
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a.)The Consumer Price Index (CPI) is an indicator of changes in consumer prices experienced by Canadians. b.)It is obtained by comparing, over time, the cost of a fixed basket of goods and services purchased by consumers.
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Market Basket
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a.)At an economic level, a market basket is a permanent set of goods and services that are bought and sold as staples in a functional economy. b.)Analysts and policymakers use average price changes in a market basket as the primary gauge of inflation.
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Base Year
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a.)A base year is the year used for comparison for the level of a particular economic index. b.)The arbitrary level of 100 is selected
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Producer Price Index
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a.)The Producer Price Index (PPI) is a weighted index of prices measured at the wholesale, or producer level. b.)A monthly release from the Bureau of Labor Statistics
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GDP Price Defelator
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a.)In economics, the GDP deflator (implicit price deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy. b.)GDP stands for gross domestic product
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Real GDP
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a.)Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes
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Business Fluctuations
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a.)The term “business cycle” (or economic cycle or boom-bust cycle) refers to economy-wide fluctuations in b.)production, trade, and general economic activity.
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Business Cycle
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a.)The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. b.)A business cycle is basically defined in terms of periods of expansion or recession.
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Peak
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a.)reach a highest point, either of a specified value or at a specified time.
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Boom
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a.)Economic Boom: A boom is a period of rapid economic expansion resulting in higher GDP, b.)lower unemployment and rising asset prices.
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Contraction
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a.)More specifically, contraction occurs after the business cycle peaks, but before it becomes a trough. b.)According to most economists, a contraction is said to occur when a country’s real GDP
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Recession
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a.)he NBER defines an economic recession as: “a significant decline in economic activity spread across the economy, b.)lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
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Depression
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a.)in economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. b.)It is a more severe downturn than an economic recession,
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Trough
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a.)In economics, a trough is a low turning point or a local minimum of a business cycle. b.)The time evolution of many variables of economics exhibit a wave like behavior with local maxima
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Expansion
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a.)An economic expansion is an increase in the level of economic activity, and of the goods and services available. b.)It is a period of economic growth as measured by a rise in real GDP.
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Recovery
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a.)An economic recovery is the phase of the business cycle following a recession, b.)during which an economy regains and exceeds peak employment and output levels achieved prior to downturn.