AP Economics Chapter 26 Flashcards

705522587	Business Cycles	Alternating rises and declines in the level of economic activity, somtimes over several years.	0
705522588	Peak	At this phase of the busines cycle, business activity has reached a temporary maximum.	1
705522589	Recession	At this phase of the business cycle, there is a period of decline in total output, income, and employment	2
705522590	Trough	At this phase of the business cycle, output and employment "bottom out" at their lowest levels	3
705522591	Expansion	At this phase of the business cycle, real GDP, income, and employment rise	4
705522592	Labor Force	Consists of people who are able and willing to work	5
705522593	Unemployment Rate	The percentage of the labor force unemployed	6
705522594	Discouraged Workers	Workers, who after unsuccesffully seeking work for a time, becoe discouraged and drop out of the labor force; these workers are not counted in the unemployment rate	7
705522595	Frictional Unemployment	Consists of search employment and wait employment; used to describe workers who are either searching for jobs or waiting to take jobs in the near future	8
705522596	Structural Unemployment	Describes workers that find it hard to obtain new jobs without retraining, gaining additional education, or relocating	9
705522597	Cyclical Unemployment	Unemployment that is caused by a decline in total spending	10
705522598	Full-Employment rate of unemployment/ Natural Rate of Unemployment (NRU)	The unemployment rate that is consisten with full employment (still less than 0 percent)	11
705522599	Potential Output	At the natural rate of unemployment (NRU) the economy is said to be producing at this level	12
705522600	GDP Gap	The difference between actual and potential GDP (can be positive or negative)	13
705522601	Okun's law	Indicates that for every 1 percentage point by which the actual unemployment rate exceeds the natural rate, a negative GDP gap of about 2 percent occurs	14
705522602	Inflation	A rise in the general level of prices	15
705522603	Consumer Price Index	The main measure of inflation in the United States, compiled by the Bureau of Labor Statistics (BLS)	16
705522604	Deflation	Price Level Declines	17
705522605	Demand-Pull Inflation	Inflation produced by excess demand bidding up the prices of the limited output	18
705522606	Cost-Push Inflation	Inflation arising on the supply, or cost side of the economy. Expalins rising prices in terms of factors that raise per unit production costs at each level of spending	19
705522607	Per Unit Production Costs	The average cost of a particular level of output	20
705522608	Core Inflation	The underlying increaes in the CPI after volatile food and energy prices are removed	21
705522609	Nominal Income	The number of dolalrs received as wages, rent, interest, or profit	22
705522610	Real Income	A measure of the amount of goods and services nominal income can by; it is the purchasing power of nominal income, or income adjusted for inflation	23
705522611	Unanticipated Inflation	Causes real income and wealth to be redistributed, harming some and benifiting others	24
705522612	Anticipated Inflation	Situations in which people see an inflation coming in advance, people are able to avoid or lessen the redistriubtion effects associated with this type of inflation	25
705522613	Cost-of living adjustments (COLAs)	Some union workers recieve this in their pay when the CPI rises, although such increases rarely equal the full percentage rise in inflation	26
705522614	Real Interest Rate	The precentage increase in purchasing power that the borrow pays the lender	27
705522615	Nominal Interest Rate	The percentage increase in money that the borrower pays the lender, including that resulting from the built-in expectations of inflation, if any	28
705522616	Hyperinflation	Extraordinarily rapid inflation; can have a devastating impact on real output and employment	29