| A | B |
|---|
| average labor productivity | total output divided by the quantity of labor employed in its production |
| business cycle | fluctuations in agregate economic activity |
| consumer price index | an index constructed by comparing the cost of purchasing a fixed basket of goods at different times |
| crowding out | the decrease in private investment that occurs as a result of a reduction in government saving or an increase in government borrowing |
| cyclical unemployment | unemployment caused by deviations of output from its potential level |
| depression | a severe recession |
| expansion | the phase of the business cycle in which the economy is growing more quickly than its long-run average |
| final goods | goods or services that are purchased by their ultimate user |
| financial markets | the institutions through which individuals with savings can supply these funds to persons or firms that wish to borrow money to purchase consumption goods or invest in physical capital |
| foreign direct investment | when a ocmpany or individual acquires assets in a foreign country that they will manage directly |
| frictional unemployment | unemployment that results because it takes time for workers to search for the jobs that are best suited to their tastes and skills |
| gross domestic product (GDP) | the market value of final goods and services produced in an economy during a specified period of time |
| human capital | skills and experience that are acquired through education, training, and on the job experience that increase a worker's productivity |
| inflation | a general increase in prices |
| intermediary | a third party who acts as a link between two others who wish to transact business |
| intermediate good | a good or service that is used in the process of producing other goods and services |
| investment | spending on capital equipment, inventories, and structures, including household purchases of new housing |
| labor force | the sum of those individuals who are employed and those who are seeking paid work but have not found it |
| labor force participation rate | the fraction of the working-age population who are in the labor force |
| net capital outflow | the difference between the purchases of foreign assets by domestic residents and the purchases of domestic assets by foreign residents |
| net exports | the difference between the value of goods and services sold to foreigners and the value of goods and services purchased from foreigners |
| nominal GDP | the production of goods and services valued at current prices |
| per capita | literally per head, used to denote an average age value for a population |
| portfolio investment | the purchase of shares of stocks or bonds |
| real GDP | the production of goods and services valued at constant prices |
