.Gross Domestic Product- the total value of all final goods and services produced in the economy during a given year

Real GDP- total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes.

Nominal GDP-the total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced.

Gross National Product (GNP)- the total value of goods and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments.

Humphrey- Hawkins Employment Act 1978- establishes price stability and full employment as national economic policy objectives.

The Act requires the Federal Reserve to conduct monetary policy pursuant to achieving these two goals, and to report to Congress on its conduct of monetary policy twice a year.

Income Approach to GDP-an approach to calculating GDP by adding up the total factor income earned by households from firms in the economy, including rent, wages, interest, and profit.

Indexation (with wages)- the process of adjusting the price of a financial instrument or contract (e.g., wages) to account for changes in the value of money over time.

Inflation- a rising overall price level

Disinflation- the process of bringing the inflation rate down

Hyperinflation- high and accelerating inflation

Deflation- a falling overall price level

Inflation rate (with equation)- the percentage increase in the overall level of prices per year. PV/ (1 + i)^n

Interest rate- the price, calculated as a percentage of the amount borrowed, charged by lenders for the use of their savings for one year.

Real interest rate- the nominal interest rate minus the rate of inflation

Inventories (as GDP component)- stocks of goods and raw materials held to facilitate business operations.

Investment Spending- spending on new productive physical capital, such as machinery and structures, and on changes in inventories.

Imports- goods and services purchased from other countries

Labor Force- the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment

Labor Force Participation Rate- the percentage of the population aged 16 or older that is in the labor force

Lagging indicator- an observable or measurable factor that changes sometime after the economic, financial, or business variable with which it is correlated changes; confirm trends and changes in trends

Leading indicator- a measurable set of data that may help to forecast future economic activity; can be used to predict changes in the economy before it begins to shift in a particular direction

M1 (money)- the money supply that is composed of currency, demand deposits, other liquid deposits—which includes savings deposits

Marginally attached workers- would like to be employed and have looked for a job in the recent past but are not currently looking for work

Market basket of goods- a hypothetical set of consumer purchases of goods and services

Menu costs- the real cost of changing listed prices

Monetary Policy- The central banks use of changes in the quantity of money or the interest rate to stabilize the economy

National income and Product Accounts (aka National Accounts)- Keep track of the flows of money among different sectors of the economy; calculated by the Bureau of Economic Analysis

Cyclical unemployment: the deviation of the actual rate of unemployment from the natural rate

demand-pull inflation: inflation that is caused by an increase in aggregate demand

Depression: a very deep and prolonged downturn

Discouraged workers: non working people who are capable of working but have given up looking for a job due to that state of the job market

Disposable income: income plus government transfers minus taxes; the total amount of household income available to spend on consumption and to save

Employment act 1946: the basic goal of the act was to provide work to those seeking it and maximize production and purchasing power.

expenditures approach to GDP: an approach to calculating GDP by adding up aggregate spending on domestically produced final goods and services in the economy-the sum of consumer spending, investment spending, government purchases of goods and services, and exports minus imports

Exports: goods and services sold to other countries

Financial markets: the markets(banking, stock, and bond) that channel private savings and foreign lending into investment spending, government borrowing, and foreign borrowing

Fiscal policy: the use of government purchases of goods and services, government transfers, or tax policy to stabilize the economy

Frictional unemployment: unemployment due to the time workers spend in job search

Full employment: where virtually all who are able and willing to work are employed

Government Transfers: payments that the government makes to individuals without expecting a good or service in return

GDP deflator: hows how much a change in GDP relies on changes in the price level

Shoe Leather Costs- Increased cost of a good due to inflation

Stagflation- Combination of inflation and stagnating (or falling) aggregate output

Stocks- A share of ownership of a business held by the shareholder

Structural inflation- inflation relating to a government's monetary policy (microeconomics) rather than to supply of and demand for goods and services

Structural unemployment- Unemployment due to workers not having the necessary skills to be effective or when there are more workers looking for a job than the number of jobs at that wage rate (Labor Market).

Unanticipated inflation- Inflation being higher than expected

Underemployment- Workers being overqualified or looking for more hours

Unemployment- People actively seeking a job but aren’t currently employed

Unemployment Calculation- U = 100(Unemployed people/Labor force)

Unemployment insurance- A state-provided insurance paying individuals weekly after losing a job and meets certain criteria

unit of account costs- When inflation causes money a less credible source of measurement

value added (as an approach to gdp)- A way of calculating GDP by surveying firms and adding their contributions to the value to final goods and services

yield curve- yield of fixed-interest securities plotted against the length of time

Natural rate of unemployment (also NAIRU) : the unemployment rate that arise from the effects of frictional plus structural unemployment

Net Exports (v. exports) : the difference between value of exports and the value

of imports (X - IM)

Peak (Business cycle) : the highest point between the end of an economic expansion and the start of a contraction in a business cycle. The peak of the cycle refers to the last month before several key economic indicators, such as employment and new housing starts, begin to fall

Per Capita (GDP) : the sum of gross value added by all resident producers in the economy plus any product taxes (less subsidies) not included in the valuation of output, divided by mid-year population

Price index : measures the cost of purchasing a given market basket in a given year, the index value is normalize so that it is equal to 100 in the selected base year

Price stability : when the overall price level is changing only slowly if at all

Private savings : disposable income minus consumer spending, disposable income that is not spent on consumption but rather goes into financial markets

Producer price index (PPI) : measure the prices of the goods and services purchased by producers

Real (v. nominal) (as general terms) : The real value is the nominal value after it has been adjusted for inflation

Real GDP growth rate : total value of all financial goods and services produced in an economy in a given year, calculated by using the prices of a selected base year in order to remove the affects of price changes

Real wage/nominal wage : the wage divided by the price level to adjust for the effects of inflation or deflation

Recession : a period of economic downturn when output and unemployment are falling

Aggregate output - the economy’s total production of goods and services for a given period of time

Aggregate price level - a measure of the overall level of prices in the economy

Bonds - a loan in the form of an IOU that pays interest

Bureau of Economic Analysis- an agency in the department of commerce that produces economic accounts and statistics

Bureau of Labor Statistics- a unit of the us department of labor that covers the field of labor

Business cycle- the alternation between economic downturns , known as recessions, and economic upturns known as expansions

C+I+G+X-IM (or C+I+G+Xn)

Chain-Linking (of economic data)- the method of calculating changes in real GDP

Circular flow diagram (in economics)- an economic model that presents how money, goods, and services move between sectors in an economic system.

Consumer price index (CPI)- measures the cost of the market basket of a typical urban american family

Expansion v. Contraction (of the business cycle)- expansion is the time period from one trough to the following peak. Contraction is the phase in the time period from one peak to the next trough

Cost-push inflation- inflation that is caused by a significant increase in the price of a n input with economy wide importance