Unemployment and Economic Growth
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
Frictional unemployment
A rise in the general level of prices in an economy; an increase in an economy’s price level.
Inflation
The total market value of all final goods and services produced annually within the boundaries of a nation
Gross Domestic Product
Recurring increase and decrease in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases.
Business Cycle
A schedule or curve that shows the various amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specified period of time.
Supply
A type of unemployment caused by insufficient total spending (insufficient aggregate demand) and which typically begins in the recession phase of the business cycle.
Cyclical unemployment
An index that measures the prices of a fixed “market basket” of some 300 goods and services bought by a “typical “ consumer
Consumer price index
Actual gross domestic product minus potential output; may be either a positive amount or a negative amount.
GDP gap
The possibility that individuals or institutions will behave more recklessly after they obtain insurance or similar contracts that shift the financial burden of bad outcomes onto others.
Moral Hazard
Changes in government spending and tax collections designed to achieve full employment, price stability, and economic growth; also called discretionary fiscal policy.
Fiscal Policy
Unemployment of workers whose skills are not demanded by employers, who lack sufficient skills to obtain employment, or who cannot easily move to locations where jobs are available.
Structural unemployment
An extremely high rate of inflation, usually defined as an inflation rate in excess of 50 percent per month.
Hyperinflation
The method that adds all expenditures made for final goods and final services to measure the gross domestic product.
Expenditure Approach
The most narrowly defined money supply is equal to currency in the hands of the public, checkable deposits, and savings deposits held at commercial banks and thrifts.
M1
The point in a business cycle at which business activity has reached a temporary minimum; the point at which a recession ends and an expansion (recovery) begins. At the trough, the economy experiences substantial unemployment and real GDP is less than potential output.
Trough
A method for determining the number of years it will take for some measure to double, given its annual percentage increase.
Rule of 70
The number of dollars received by an individual or group for its resources during some period of time.
Nominal income
Created in Britain to explain the change in the country
Modern Economic Growth
The trading of votes by legislators to secure a favorable outcome on decisions concerning the provision of public goods and quasi-public goods.
Logrolling
The tendency of competition to cause individuals and firms to unintentionally but quite effectively promote the interest of society, even when each individual or firm is only attempting to pursue their own interests.
Invisible hand
The generalization that any 1-percentage-point rise in the unemployment rate above the full-employment rate of unemployment is associated with a rise in the negative GDP gap by 2 percent of potential output (potential GDP).
Okun’s law
The amount of goods and services that can be purchased with nominal income during some period of time; nominal income adjusted for inflation.
Real Income
An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology.
Economic Growth
Fraction (or percentage) of disposable income that households spend on consumer goods; consumption divided by disposable income
Average Propensity to Consume
A situation in a severe recession in which the central bank’s injection of additional currency(liquidity) into the financial system has little or no additional positive impact on lending, borrowing, investment, or aggregate demand.
Liquidity Trap