Unit 2: Economic Indicators and the Business Cycle

________ is used to measure the economic growth of a country.

________ domestic product (GDP)- The market value of the final goods and services produced within a nation in a given period.

________- The bottom of the cycle where a contraction has stopped.

The ________ is based on a market basket of goods bought by consumers, including the ones produced abroad.

________- The top of a business cycle where an expansion has ended.

________ is any business that produces goods and supplies them to the product market and then receives the payment for those goods.

________- A collection of goods and services used to represent what is consumed in the economy.

________ evolve- The emergence of new products (smartphones) and the extinction of others (manual typewriters) is understood by firms and consumers, but the market basket must reflect this or it risks becoming irrelevant.

________- Unofficially defined as two consecutive quarters of falling real GDP.

________ refer to the fluctuations in economic activity over time.

It occurs because inflation causes the value of the ________ to decrease over time.

________ are the people who buy the goods /services in an economy.

The ________ includes all items that make up domestic products.

Contraction- A period where ________ is falling.

________: the general decrease in prices.

Closed economy- A model that assumes there is no ________ (imports and exports)

A model that shows how households and firms circulate resources, goods, and incomes through the economy

A model that assumes there is no foreign sector (imports and exports)

The market value of the final goods and services produced within a nation in a given period

The sum of all spending from four sectors of the economy

M)

Spending done by customers

Investment is defined as current spending to increase output or productivity later

Purchases made by the government for final goods and services and investments in infrastructure

The sum of all income-Wages + Rent + Interest + Profit-earned by suppliers of resources in the economy

A third approach to calculating GDP that considers all stages of production of a final good and the value that was added to the final good along the way

A person is employed if they have worked for pay at least one hour per week

A person is unemployed if they are not currently working but are actively seeking work

The sum of all individuals 16 years and older who are either currently employed (E) or unemployed (U)

A person is classified as out of the labor force if they have chosen to not seek employment

The ratio of the size of the labor force to the size of the population 16 years and older

The percentage of the labor force that falls into the unemployed category

Citizens who have been without work for so long that they become tired of looking for work and drop out of the labor force

A type of unemployment that occurs when someone new enters the labor market or switches jobs

A type of unemployment that is periodic, predictable, and follows the calendar

A type of unemployment that is the result of fundamental, underlying changes in the economy such that some job skills are no longer in demand

A type of unemployment that rises and falls within the business cycle

Exists when the economy is experiencing no cyclical unemployment

The unemployment rate associated with full employment, somewhere between 4 to 6 percent in the United States

The price index that measures the average price level of the items in the base year market basket

the general decrease in prices

the general increase in prices

a decrease in the rate of inflation

the percentage change in aggregate price level across an entire economy in a year

A collection of goods and services used to represent what is consumed in the economy

The percentage change in the CPI from one period to the next

The percentage change in the CPI from one year to the next

Todays income is measured in todays dollars

Todays income is measured in base year dollars

As the price of goods begins to rise, we know that consumers seek substitutes

The emergence of new products (smartphones) and the extinction of others (manual typewriters) is understood by firms and consumers, but the market basket must reflect this or it risks becoming irrelevant

Some price increases are the result of improvements in quality

The percentage increase in purchasing power that a borrower pays a lender

The value of current production at the current prices

The value of current production but using prices from a fixed point in time

The year that serves as a reference point for constructing a price index and comparing real values over time

A measure of the average level of prices in a market basket for a given year, when compared to the prices in a reference (or base) year

The price index that measures the average price level of the goods and services that make up GDP

The periodic rise and fall in 4 phases present in economic activity

A period where real GDP is growing

The top of a business cycle where an expansion has ended

A period where real GDP is falling

Unofficially defined as two consecutive quarters of falling real GDP

A prolonged, deep contraction in the business cycle

The bottom of the cycle where a contraction has stopped