MACRO CH.6

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17 terms · macroeconomics Business Cycle and Unemployment

BUSINESS CYCLE

alternating periods of economic growth and contraction which can be measured by changes in real GDP

PEAK

the phase of the business cycle in which real GDP reaches its maximum after rising during a recovery.

RECESSION

a downturn in the business cycle during which real GDP declines and the unemployment rate rises. Also called contraction

TROUGH

the phase of the business cycle in which real GDP reaches its minimum after falling during a recession

RECOVERY

an upturn in the business cycle during which real GDP rises. Also called an expansion

ECONOMIC GROWTH

an expansion in national output measured by the annual percentage increase in a nation's real GDP

LEADING INDICATORS

variables that hang before real GDP changes

COINCIDENT INDICATORS

variables that change at the same time that real GDP changes

LAGGING INDICATORS

variables that change after real GDP changes

UNEMPLOYMENT RATE

the percentage of people in the civilian labor force who are without jobs and are actively seeking jobs

CIVILIAN LABOR FORCE

the number of people 16 yrs of age and older who are employed or who are actively seeking a job excluding armed forces, homemakers, discouraged workers, and other persons not in the labor force

DISCOURAGED WORKER

a person who wants to work, but who has given up searching for work because he or she believes there will be no job offers

FRICTIONAL UNEMPLOYMENT

unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed

STRUCTURAL UNEMPLOYMENT

unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities

CYCLICAL UNEMPLOYMENT

unemployment caused by the lack of jobs during a recession

FULL EMPLOYMENT

the situation in which an economy operates at an unemployment rate equal to to the sum of the frictional and structural unemployment rates. also called the natural rate of unemployment.

GDP GAP

the difference between actual real GDP and potential or full-employment real GDP.

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