1. Unanticipated Inflation
    Inflation at a rate that comes as a surprise, either or lower than the rate anticipated.
  2. Cost-of-living adjustments (COLAs)
    Clauses in contracts that allow for increases in specified nominal values to take account of changes in the cost of living.
  3. Expansion
    A business fluctuation in which the pace of national economic activity is speeding up.
  4. Unemployment
    The total number of adults (aged 16 years or older) who are willing and able to work and who are actively looking for work but have not found a job.
  5. Depression
    An extremely severe recession.
  6. Repricing, or menu, cost of inflation
    The cost associated with recalculating prices and printing new price lists when there is inflation.
  7. Deflation
    A sustained decrease in the average of all prices of goods and services in an economy.
  8. Nominal rate of interest
    The market rate of interest expressed in today's dollars.
  9. Natural rate of unemployment
    The rate of unemployment that is estimated to prevail in long-run macroeconomic equilibrium, when all workers and employers have fully adjusted to any changes in the economy.
  10. Seasonal unemployment
    Unemployment resulting from the seasonal pattern of work in specific industries. It is usually due to seasonal fluctuations in demand or to changing weather conditions, rendering work difficult, if not possible, as in the agriculture, construction, and tourist industries.
  11. Job loser
    An individual in the labor force whose employment was involuntarily terminated.
  12. Real rate of interest
    The nominal rate of interest minus the anticipated rate of inflation.
  13. Producer Price Index (PP)
    A statistical measure of a weighted average of prices of goods and services that firms produce and sell.
  14. Leading indicators
    Events that have been found to occur before changes in business activity.
  15. Discouraged Workers
    Individuals who have stopped looking for a job because they are convinced that they will not find a suitable one.
  16. Labor Force
    Individuals aged 16 years or older who either have jobs or who are looking and available for jobs; the number of employed plus the number of unemployed.
  17. Inflation
    A sustained increase in the average of all prices of goods and services in an economy.
  18. Anticipated inflation
    The inflation rate that we believe will occur; when it does, we are in a situation of fully anticipated inflation.
  19. Stock
    The quantity of something, measured at a given point in time-for example, an inventory of goods or a bank account. Stocks are defined independently of time, although they are assessed at a point in time.
  20. Labor force participation rate
    The percentage of noninstitutionalized working-age individuals who are employed or seeking employment.
  21. GDP deflator
    A price index measuring the changes in prices of all new goods and services produced in the economy.
  22. Recession
    A period of time during which the rate of growth of business activity is consistently less than its long-term trend or is negative.
  23. Business fluctuations
    The ups and downs in business activity throughout the economy.
  24. Personal Consumption Expenditure (PCE) Index
    A statistical measure of average prices that uses annually updated weights based on surveys of consumer spending.
  25. Consumer Price Index (CPI)
    A statistical measure of a weighted average of prices of a specified set of goods and services purchased by typical consumers in urban areas.
  26. Full Employment
    An arbitrary of unemployment that corresponds to "normal" friction in the labor market. In 1986, a 6.5 percent rate of unemployment was considered full employment. Today, it is assumed to be around 5 percent.
  27. Flow
    A quantity measured per unit of time; something that occurs over time, such as the income you make per week or per year or the number of individuals who are fired every month.
  28. Frictional unemployment
    Unemployment due to the fact that workers must search for appropriate job offers. This takes time, and so they remain temporarily unemployed.
  29. Purchasing Power
    The value of money for buying goods and services. If your money income stays the same but the price of one good that you are buying goes up, your effective purchasing power falls, and vice versa.
  30. Structural unemployment
    Unemployment resulting from a poor match of workers' abilities and skills with current requirements of employers.
  31. Cyclical unemployment
    Unemployment resulting from business recessions that occur when aggregate (total) demand is insufficient to create full employment.
  32. Job leaver
    An individual in the labor force who quits voluntarily.
  33. Base Year
    The year that is chosen as the point of reference for comparison of prices in other years.
  34. Contraction
    A business fluctuation during which the pace of national economic activity is slowing down.
  35. New Entrant
    An individual who has never held a full-time job lasting two weeks or longer but is now seeking employment.
  36. Price index
    The cost of today's market basket of goods expressed as a percentage of the cost of the same market basket during is a base year.
  37. Reentrant
    An individual who used to work full time but left the labor force and has now reentered it looking for a job.
Card Set
Chapter 7 Vocabulary