deflation

Chapter 14: Inflation: An Overview ? -The economic costs of inflation -How inflation creates winners and losers -Why policy makers try to maintain a stable rate of inflation -The difference between real and nominal values of income, wages, and interest rates -The problems of deflation and disinflation ? Inflation: Most common complaint: an increase in the price level makes everyone poorer- does not make everyone poorer Real Wage: the wage rate divided by the price level Real income: income divided by the price level Inflation Rate: the percent change per year in a price index?typically the consumer price index the percent increase in the overall level of prices per year ? ? The level of prices doesn?t matter Reducing prices = Reducing income

Chapter 2: Module Introduction to Macroeconomics ? Business Cycle: differences between downturns and upturns in macroeconomic Depression: Deep and prolonged downturn (ex: great depression) Recession: shorter economic downturns where output and employment are dropping (ex: state of the US now) Expansion: upturn where output and employment are rising Employment/Unemployment Employment: total number of people working for pay, rises in good economy Unemployment: total number of people who aren?t employed, rises in bad economy Labor Force: A country?s sum of employment and unemployment Unemployment Rate: percentage of labor force/people in country who are unemployed Aggregate Output Output: quantity of goods and services, decreases in bad economy