| A | B |
|---|
| TERM | DEFINITION |
| anticipated inflation | expected increases in the price level |
| business cycles | recurring increases and decreases in the level of economic activity over periods of years |
| Consumer Price Index | a price measure of a fixed market basket of typical consumer goods |
| cost of living adjustments | an automatic increase in the income of workers when inflation occurs |
| cost-push inflation | Increases in the price level resulting from an increase in resource costs |
| cyclical unemployment | unemployment caused by insufficient total spending |
| deflation | a decline in the economyÕs price level |
| demand-pull inflation | Increases in the price level resulting from an excess demand over output at the existing price level |
| discouraged workers | employees who have left the work force because they have been unable to find work |
| economic growth | an increase in real output or real output per capita |
| expansion | a phase of the business cycle in which real GDP, income, and employment rise |
| frictional unemployment | unemployment caused by workers voluntarily changing jobs and by temporary lay-offs |
| full-employment rate of unemployment | the unemployment rate with no cyclical unemployment |
| GDP gap | Actual gross domestic product minus potential output |
| hyperinflation | a very rapid rise in the price level |
| inflation | a rise in the general level of prices in an economy |
| labor force | persons 16 and older, not institutionalized, who are employed or unemployed and seeking work |
| natural rate of unemployment | the full-employment unemployment rate; the unemployment rate at which actual inflation equals expected inflation |
| nominal income | the number of dollars received by an individual or group for its resources during some period of time |
| nominal interest rate | the interest rate expressed in terms of annual amounts currently charged for interest and unadjusted for inflation |
| OkunÕs law | the generalization that any 1 percentage point rise in unemployment above full employment will increase the |
| peak | the point of a the business cycle at which business activity has reached a temporary maximum; the economy is near or at full employment and the level of output is at or very close to capacity |
| potential output | the real output an economy can produce when it fully employs its resources |
| productivity | a measure of real output per unit of input |
| real GDP per capita | inflation adjusted output per person |
| real income | the amount of goods and services that can be purchased with nominal income |
| real interest rate | the interest rate expressed in constant dollars |
| recession | a period of declining real GDP, accompanies by lower real income and higher unemployment |
| rule of 70 | a method of determining the number of years it will take for some measure to double |
| structural unemployment | unemployment of workers whose skills are not demanded by employers |
| unanticipated inflation | increases in the price level at a rate greater than expected |
| unemployment rate | the percentage of the labor force unemployed at any time. |
