AP Macroeconomics - Unit 2 Vocabulary (copy)

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.

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

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

The periodic rise and fall (in four phases) of economic activity

A period where real GDP is growing.

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

The period where real GDP is falling

The bottom of the business cycle where a contraction has stopped.

The price index that measures the average price level of the items in the base year market basket. This is the main measure of consumer inflation.

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

When the government redistributes income. (ex. Welfare, social security)

Payment for one of the four factors of production, namely rent, wages, interest and profit

Government payments to businesses.

Part of the economy that is urn by individuals and businesses.

Part of the economy that is controlled by the actions of the government.

Workers that are actively looking for a job but are not working.

The percent of people in the labor force who want a job but are not working

Temporary unemployment or being between jobs.

Changes in the labor force because the labor skills are now obsolete

Unemployment caused by a recession.

Frictional plus Structural Unemployment. The amount of unemployment that exists when the economy is healthy and growing.

The Real GDP created when there is no cyclical unemployment

Those people who are at least 16 years old, willing and able to work, and are not institutionalized, in the military, in school full-time, or retire.

A model that shows how households and firms circulate resources, goods and incomes though the economy. This basic model is expanded to include the G and Foreign sector.

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

Goods that require further modification before they are ready for final use.

Household work or do-it-yourself jobs are missed by GDP accounting. The same is true of Government transfer payments and purely financial transactions.