1. Great Depression
    severe worldwide economic downturn that occurring in the decade preceding WWII. 10/1929 - 1941
  2. Run on the Banks
    depositors suddenly seek to withdraw their funds from banks because they are afraid the bank will fail (go bankrupt)
  3. Economic Growth
    an increase in real GDP(gross domestic product)
  4. Recession, Contraction
    a phase of the business cycle extending from a peak to the next trough, when real GDP tends to be falling. Characterized by a significant decline in overall business activity, visible output, income, employment, and trade. Informally recessions are identified by a decline in real GDP for a least 6 months.
  5. Capacity Utilization-excess/unused/or overcapacity
    condition of producing significantly less than maximum possible output
  6. Expect
    Believe something is likely to happen, predict. Does not imply or assume an expected event is good or desirable.
  7. Expectations
    beliefs, outlooks, or predictions about the future (optimistic, pessimistic, neutral)
  8. Employment/Employed person
    someone at least 16 who worked at least 1 hour a week for pay or at least 15 hours per week in a family business
  9. Unemployment/Unemployed
    someone at least 16 who was not employed but actively looked for work (bureau of labor statistics)
  10. Net job creation/loss
    the change in the number of existing jobs in a month (new jobs created - jobs lost)
  11. New jobless claims
    number of people submitting paperwork to receive unemployment insurance benefits.
  12. Involuntarily part-time workers
    persons working part-time who would like to work full-time
  13. Duration of unemployment
    the average number of weeks someone is unemployed before finding a job
  14. Labor force participation rate
    percentage of the population age 16 and over that is in the labor force = number in labor force over number in working age population x 100
  15. reasons for unemployment
    • entrant
    • 2. re-entrant
    • 3.job loser
    • 4. job leaver
    • 5. laid off
  16. Structural Unemployment
    long term unemployment due to a mismatch between skills of of a group of job seekers and the existing job opportunities, often cause by changing types of output
  17. Full employment
    the unemployment rate that would exist in the absence of cyclical unemployment
  18. Natural rate of unemployment (NAIRU)
    the lowest possible unemployment rate without setting of rising inflation (the non accelerating inflation rate of unemployment). this concept is part of conservative (classical) economic theory.
  19. Potential real GDP
    the amount of output produced at full employment
  20. Demographic groups
    different population segments(social groups) characterized through statistical study
  21. Deflation
    a sustained decrease in the average level of prices
  22. disinflation
    a decrease in the rate of inflation
  23. Stagflation
    a period of inflation while economic growth is stagnant (output is not growing)
  24. Embargo
    government order prohoibiting all or some types of trade with a foreign nation
  25. Nominal Income
    the actual dollar amount received over a time period (money income)
  26. Real Income
    nominal income overa time period adjusted to remove the effects of inflation. Real income shows changes in the purchasing power of someone's money income over time
  27. break even income
    the level of income where disposable income is being spent and saving is $0
  28. autonomous
    independent of level of real GDP; determined by some other variable or set of decisions.
  29. vertical intercept
    point on line where it crosses the vert. axis of a graph(and where the value being measured along the axis = 0)
  30. income aggregrate expenditures model
  31. aggregrate expenditures =?
    measure of national income
    C(consumption) + I (income) + G(government spending) + X(exports)
  32. multiplier exercise
    • spending multiplier equals 1 divided by mps(marginal propensity to consume plus mpi(marginal propensity to import)
    • total change in income equals s.m x intial spending
    • new equilibrium equals starting gdp plus the total change in income figured
  33. macro equilibrium (basic formula of keynesian theory)
    gdp gap equals potential real gdp minus actual real gdp
  34. gdp gap and recesionary gap
    recessionary gap equals needed change in spending equals gdp gap over s.m equals full employment output minus current AE measured at full employment Yp equals vertical distance between AE and 45 degree line at Yp.
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