Unemployment
These are former job seekers who gave up due to a lack of available jobs.
What are discouraged workers?
A new car produced in New Jersey this year counts in this country’s GDP.
What is the United States?
Unexpected inflation helps this group because they repay debts with money that’s worth less.
Who are borrowers?
CPI tracks the cost of a fixed basket of goods. GDP deflator does not use a fixed basket but instead tracks this.
What are current-year goods and services?
At this point, unemployment is at its highest and GDP is at its lowest.
What is the trough?
(Unemployed / Labor Force) * 100
What is the unemployment rate?
A U.S. company builds and sells cars in Japan. The value of these cars counts in this country’s GDP.
What is Japan?
A general decrease in the price level is known as this.
What is deflation?
CPI counts paying for rent, groceries, and clothing, but not buying 100 shares of Taco Bell. This is because CPI excludes this type of item.
What are investments?
At this point, the highest level of real GDP is reached, right before the economy begins to decline.
What is the peak?
This type of unemployment occurs when people are temporarily between jobs or searching for better opportunities
What is the frictional unemployment?
A country’s nominal GDP rose by 10%, but real GDP only grew by 3%. This explains the remaining 7%.
What is inflation?
If the government prints excessive amounts of money over a short period, extreme inflation can occur.
What is hyperinflation?
If nominal income increases by 8% while CPI rises by 8% as well, real income changes by this amount.
What is 0%?
The economy is growing, unemployment is falling, and inflationary pressure is building in this phase.
This is the level of unemployment when the economy is producing at full output (no cyclical unemployment).
What is the natural rate of unemployment?
If a country produces more goods and services this year than last year, but prices stayed the same, this measure must increase.
What is real GDP?
If inflation is higher than expected, fixed-income individuals experience this effect.
What is a loss of purchasing power?
If the market basket costs $400 in the base year and $520 today, this is today’s CPI.
What is 130?
Economists use this term to refer to short-run fluctuations in GDP over time.
What is the business cycle?
This type of unemployment rises during recessions because firms lay off workers when demand falls.
What is cyclical unemployment?
If a company produces $5 million worth of inventory that doesn’t sell this year, this part of GDP increases.
What are investments?
When the government sends a large stimulus check to every household, this can lead to an inflationary effect.
What is demand-pull inflation?
A consumer switches from beef to chicken because beef has gotten expensive, but CPI doesn’t reflect this switch. This is an example of this issue.
What is substitution bias?
A recession becomes official when this condition occurs.
What are two consecutive quarters of falling real GDP?