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40 terms

Econ 222 part 2

specifically for Prof. Jones' Econ 222 class at Cal Poly
STUDY
PLAY
savings (S)
income not spent
average propensity to save (APS)
savings rate, the percent of disposable income used for savings, also the the slope of S as a function of Yd
average propensity to consume (APC)
percent of disposible income used for consumption, also the slope of C as a function of Yd
dissavings
negative savings (current C > current Yd)
aggregate demand (AD)
theoretical composite purchases as a function of price level (P)
price indexes
numerical gauges that show the change in the average price level relative to some base period (ex. CPI, PPI, IPD, etc)
core index
any price index that excludes volatile prices such as oil/energy and food
disinflation
decrease in the inflation rate where price level rises but at a decreased rate
staginflation
stunted growth in GDP with inflation
induced
caused by or related to
constant
unrelated to or unaffected by
expansionary
causing increases in output and employment
contractionary
causing decreases in output and employment
inflationary
causing increases in the price level
deflationary
causing decreases in the price level
equilibrium level of national income/output (Ye)
level of Y at which AS = AE and net change in inventories = 0, economy is at rest since there is no pressure to expand or contract
disequilibrium level of national income/output
any level of Y other than Ye, net change in inventories is not equal to 0, economy feels pressure to expand or contract
full-employment level of national income/output (Y*)
level of output at which the economy achieves full employment(NAIRU)
marginal propensity to withdraw (MPW)
percentage of a change in national income used for S+T+M (savings, taxes, imports), also the slope of W
marginal propensity to spend (z)
percentage of change in national income used for spending, also the slope of AE
labor force/work force/labor pool
4 types: full time paid, part time paid (1+hr/wk), volunteers >= 15hrs/wk, involuntarily unemployed
unemployment rate (U)
# people involuntarily out of work looking for jop / labor force (round to .1 place)
discouraged unemployed
looking for job but unable to find and taking a break from looking
full employment unemployment rate (NAIRU-non accelerating inflation rate of unemployment)
lowest rate of unemployment realistically achieveable given no cyclical unemployment, virtually no structural unemployment and minimal frictional unemployment
premature inflation
all increases in price level prior to attainment of full employment, includes cost/push, profit/push, structural inflation
pure inflation
all increases in price level which occur at full-employment, demand/pull inflation caused by excess AEs beyond capacity of economy to produce is a form of pure inflation
structural inflations
caused by a shift in demand
cost-push inflation
caused by firms shifting increased costs onto consumers
ratchet effect
reluctance of price level to fall despite decreases in output and employment, businesses more likely to lay off workers/reduce output than lower prices
cost of living adjustment (COLA)
incomes keep pace with inflation according to this
recovery/upswing/upturn
increases in real GDP over time
recession/downswing/downturn
decreases in real GDP over time
contraction
long term decreases in GDP
expansion
long term increases in GDP
prosperity
phase of business cycle which has full employment GDP and pure inflation (range 3)
durables
goods which have a usable lifespan of 1-3 yrs, tend to be produced/sold based on business cycle
non-durables
goods which have a usable lifespand of less than 1-3 yrs, tend to be produced/sold constantly
work week
average number of hours worked per week, tends to be cyclical
profit-push inflation
form of cost-push inflation (range2), considered healthy for economy since firms increase employees and output
index of leading economic indicators (LEI)
prediction gauge of economic activity 6-9 months in advance, composed of Commerce Department tracks leading, coincident, lagging economic indicators