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The period of a business cycle during which total production and total employment are increasing
The period of a business cycle during which total production and total employment are decreasing
The average GDP over a long period of time - level of real GDP attained when all firms are producing at capacity
The market value of all final goods and services produced in a country during a period of time - measures the well-being economy
A payment by the government where they get no good or service in return (ex. unemployment check - not counted towards GDP)
Marginal Propensity to Consume (MPC)
The percentage of additional disposable income you consume (between 0 and 1)
Spending by firms on new factories, office buildings, machinery, and additions to inventory. Also included is spending by households on new houses
People who are available for work but have not looked for a job during the previous 4 weeks because they believe no jobs are available for them
Short-term unemployment that arises from the process of matching workers with jobs (in between jobs)
Unemployment arising from a persistent mismatch between the skills and attributes of workers and the requirements of the job (have to learn new skills)
Natural Rate of Unemployment
When unemployment consists of only frictional and structural unemployment
Consumer Price Index (CPI)
Average of the prices of the goods and services purchased by the typical urban family of four
Long-Run Economic Growth
The process by which rising productivity increases the average standard of living
The quantity of goods and services that can be produced by one worker (or by one hour of work)
Market for Loanable Funds
Interactions of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged
Supply of Loanable Funds Depends On
Households willingness to save and the extent of government savings
Reasons for Separation of Rich and Poor
Environment, Type of Government, Wars and Revolutions, Low Rates of Saving
Enhance Property Rights, Improve health and education, Promote Technological Change, Promote Savings and Investment
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