Macro2

• -Alternating periods of economic growth and contraction
• -measured by changes in real GDP

• -phase of business cycle
• -real GDP reaches max after rising during a recovery

• -downturn in business cycle
• -real GDP declines
• -unemployment rate rises

• -phase in business cycle
• -real GDP reaches min after falling during a recession

• -upturn in the business cycle
• -real GDP rises

-expansion in national output measured by annual percentage increase in a nation's real GDP

-variables that change before real GDP changes

-Variables that change at the same time that real GDP changes

-Variables that change after real GDP changes

-the % of people in the civilian labor force who are without jobs and actively seeking them

• -number of people ages 16 and older who are employed or who are actively seeking a job
• -excludes armed forces, homemakers, discouraged workers, and other persons not in the labor force

-a person who wants to work, but who has given up searching for work because he or she believes there will be no job offers

• -Unemployment caused by the normal search time required by worked with marketable skills
• -changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed

-Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities

-Unemployment caused by the lack of jobs during a recession

-economy operates at an unemployment rate equal to the sum of frictional + structural unemployment rates

Difference between actual real GDP and potential or full-employment real GDP

an increase in the general (avg) price level of goods and services in the economy

-a decrease in the general (avg) price level of goods and services in the economy

-measures changes in the average prices of consumer goods and services

a year chosen as a reference point for comparison with some earlier or later year

a reduction in the rate of inflation

the actual number of dollars received over a period of time

the actual number of dollars received (nominal income) adjust for changes in the CPI.

the value of the stock of assets owned at some point in time

the actual rate of interest without adjustment for the inflation rate

the nominal rate of interest minus the inflation rate

a home loan that adjusts the nominal interest rate to the changes in an index rate, such as rates on Treasury securities

a rise in the general price level resulting from an excess of total spending (demand)

an increase in the general price level resulting from an increase in the cost of production

an extremely rapid rise in the general price level

a situation that occurs when increases in nominal wage rates are passed on in higher prices which in turn results in even higher nominal wage rates and prices