Economic instability Review

Business Cycles

100

Systematic Changes in Real GDP marked by alternating period of expansion and contraction

Business Cycles

200

Decline in Real GDP lasting at least 6 consecutive months

Recession

300

Point in time when Real GDP stops declining and begins to expand

Trough

400

Growth path the economy would follow if it were not interrupted by alternating periods of recession and recovery

Trend Line

500

Statistical series used to predict recessions. Normally turns down before the economy turns down or turns up before the economy turns up

Leading Economic Indicator

Inflation

100

Sustained Rise in the general level of prices of goods and services

Inflation

200

Representative collection of goods and services used to compile a price index

Market Basket

300

Index used to measure price changes for a market basket of frequently used consumer items

Consumer Price Index (CPI)

400

Inflation Explanation that states that prices rise because sectors of the economy try to buy more goods and services than the economy can produce

Demand-Pull Inflation

500

Inflation explanation that states that rising input costs drive up the cost of products for manufacturers and thus cause inflation

Cost-Push Inflation

Unemployment

100

State of working for less than one hour per week for pay while being available and having made an effort to find a job during the past month

Unemployed

200

Non-institutionalized part of the population, aged sixteen and over, either working or looking for a job

Civilian labor force

300

Workers who have been unemployed for twenty-seven weeks or more

Long-term unemployed

400

Unemployment caused by a fundamental change in the economy that reduces the demand for some workers

Structural Unemployment

500

Difference between what the economy can and does produce

GDP gap