notes - Prosperity Is the Goal Inflation a sustained rise in the general price level of goods and services goals low unemployment low inflation strong

notes - Prosperity Is the Goal Inflation a sustained rise...

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Prosperity Is the Goal Inflation – a sustained rise in the general price level of goods and services goals: low unemployment, low inflation, strong growth in GDP, increasing incomes Recession – two or more successive quarters in which the economy shrinks instead of grows recession: increased unemployment, stagnation income, loss of jobs Unemployment Unemployment – the inability of those who are in the labor force to find a job; defined as the total number of those actively looking for a job but unable to find one Full Employment – an arbitrary level of unemployment that corresponds to “normal” friction in the labor market. In the 1986, a 6.5 percent rate of employment was considered full employment. Today, it is assumed to be around 5 percent Full Employment Act of 1947 set the level at 4% 2001-2002 increased from 4 to 6.5% / 2005 – less than 5% / 2008 – 5.5% / 2009 – 9% laissez-faire economics (“let it be”) – no gov’t intervention
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