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100
a decline in GDP combined with a rise in the price level
stagflation
100
the lowest point in an economic contraction, when the price level stops falling
trough
100
an increase in efficiency gained by producing more output without using more inputs
technological progress
100
a period of economic decline marked by falling real GDP
contraction
100
a prolonged economic contraction
recession
200
the proportion of disposable income spent to income saved.
savings rate
200
key economic variables that economists use to predict a new phase of the business cycle
leading indicators
200
the total amount of goods and services available in the economy available at all price levels
aggregate supply
200
In a typical business cycle which stage immediately follows a peak?
Contraction
200
the dollar value of all final goods and services produced in an economy in a given year
Gross Domestic Product (GDP)
300
A durable good should last longer than ______ years.
Three
300
Would the income of a doctor be included in GDP?
Yes (see the definition of GDP)
300
The amount of money a person has left of his or her income after taxes is called
disposable income
300
Would a cake purchased from a bakery for a wedding be calculated as part of GDP?
Yes
300
Give two examples of durable goods
washing machines, new cars, houses, etc.
400
goods used in the production of final goods
intemediate goods
400
Would toys manufactured in China by a factory owned by a U.S. firm, be counted as U.S. GDP?
No
400
the average of all prices in an economy
price level
400
What is real GDP per capita and why is it important?
Real GDP divided by the total population.... it is important to know how large a workforce is that is contributing to the GDP
400
How is nominal GDP converted into real GDP?
Through eliminating the effects of inflation on GDP growth
500
GDP expressed in constant, or unchanging prices is called
real GDP
500
In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by what type of curve?
aggregate demand curve
500
What is the difference between a recession and a depression?
A depression is a deep recession with higher levels of unemployment
500
Why does higher savings lead to higher GDP in the future
More capital is available for investment, leading to a higher output through capitol deepening
500
How do consumer fears of future economic problems affect GDP?
Consumers will spend less and save more, GDP will fall
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