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Real GDP The total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices Nominal GDP The total value of final goods and services for a particular period valued in terms of prices for that period. Business Cycle The economy's pattern of expansion, then contraction, then expansion again Expansion A sustained period in which real GDP is rising Recession A sustained period in which real GDP is falling Peak The point of the business cycle at which an expansion ends and a recession begins Trough The point of the business cycle at which a recession ends and an expansion begins Inflation An increase in the average level of prices Deflation A decrease in the average level or prices Hyperinflation An inflation rate in excess of 200% per year Price Index A number whose movement reflects movement in the average level of prices Base Period A time period against which costs of the market basket in other periods will be compared in computing a price index Consumer price index A price index whose movement reflects changes in the prices of goods and services typically purchased by consumers Implicity Price Deflator A price index for all final goods and services produced; it is the ratio of nominal GDP to real GDP Personal Consumption Expenditures Price Index A price index that includes durable goods, nondurable goods, and services and is provided along with estimates for prices of each component of consumption spending Real Value A value expressed in units of constant purchasing power Nominal Value A value expressed in dollars of the current period Labor Force The total number of people working or unemployed Unemployment Rate The percentage of the labor force that is unemployed Natural level of employment The employment level at which the quantity of labor demanded equals the quantity supplied Natural rate of unemployment The rate of unemployment consistent with the natural level of employment Frictional unemployment Unemployment that occurs because it takes time for employers and workers to find each other Structural unemployment Unemployment that results from a mismatch between worker qualifications and the characteristics employers require Cyclical unemployment Unemployment in excess of the unemployment that exists at the natural level of employment