| A | B |
|---|
| business cycle | a recurring pattern in economic activity that is characterized by alternating periods of contraction and expansion |
| output expenditure model | GDP = C + I +G + (X-M) |
| inflation | value of dollar decreasing |
| peak | when economy has topped out and GDP begins to decline |
| contraction | a period of declining GDP |
| recession | period of three quarters (9 months) of falling GDP |
| unemployment | people ages 16 and over who are actively looking for a job |
| trough | GDP slowly begins to increase |
| recovery | the period following the trough with GDP growth (basically another expansion) |
| frictional unemployment | people changing are looking for jobs |
| cyclical unemployment | in a recession or downfall in the economy |
| structural unemployment | somebody's skills are no longer useful |
| progressive tax | tax that taxes a larger percentage of wealthy peoples income than the less wealthy |
| proportional tax | taxes everyone the same percentage of their income. |
| fiscal straight jacket | way for government to spend wisely |
| regressive tax | tax that takes a larger percentage of the lower income citizens then it does the wealthy |
| Gross Domestic Product (GDP) | the total value of all goods and services produced in a country in a year |
| Government Spending (G) | total amount of money spent by the government on things such as the military, roads, welfare |
| Investment Spending (I) | (or business spending)the amount of money businesses spend in one year |
| Consumer Spending (C) | total amount that consumers spend on goods and services |
| Exports (X) | goods that are shipped out of the U.S. and bought in another country |
| Imports (M) | goods that are brought in from other countries and bought in the U.S. |
| expansion | a period described by increasing GDP or economic growth |
