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Unformatted text preview: TEST T HREE Chapter 22 Real gross domestic product (Real GDP) the market value of final goods and services produced in an economy, stated in the prices of a given year. Per capita real output real GDP divided by the total population. Keynesians group of macroeconomists who generally favor activist government policy. Classicals group of macroeconomists who generally favor laizzes-faire or nonactivist policies. Recession decline in real output that persists for more than two consecutive quarters of a year. Depression large recession Expansion an upturn that lasts at least 2 consecutive quarters in a year. Unemployment rate the percentage of people in the economy who are willing and able to work but who are not working. Cyclical unemployment unemployment resulting from fluctuations in economic activity. Structural unemployment unemployment caused by the institutional structure of an economy or by economic restructuring making some skills obsolete. Frictional unemployment unemployment caused by people entering the job market and people quitting a job just long enough to look for and find another one. The target rate of unemployment lowest sustainable rate of unemployment that policy makers believe is achievable given existing demographics and the economys institutional structure. Labor force people in an economy who are willing and able to work. Labor force participation rate measures the labor force as a percentage of the total population at least 16 years old. Employment-population ratio the number of people who are working as a percentage of people available to work. Potential output output that would materialize at the target rate of unemployment and the target rate of capacity utilization. Okuns rule of thumb - +1% unemployment rate = -2% change in output. Inflation/deflation a continual rise/fall in the price level. Price index a number that summarizes what happens to a weighted composite of prices of a selection of goods (often called a market basket of goods) over time. GDP deflator index of the price level of aggregate output, or the average price of the components in total output (GDP) relative to a base year. Consumer price index (CPI) measures the prices of a fixed basket of consumer goods, weighted according to each components share of an average consumers expenditures. Personal consumption expenditure (PCE) deflator measure of prices of goods that consumers buy that allows yearly changes in the basket of goods that reflect actual consumer purchasing habits. Producer price index (PPI) index of prices that measures average change in the selling prices received by domestic producers of goods and services over time....
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This note was uploaded on 05/09/2011 for the course ECON 2000 taught by Professor Roussell during the Spring '06 term at LSU.
- Spring '06