Econ unit 6

What is debt?
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Terms in this set (45)
What is debt?
requires one party, the debtor, to pay money or other agreed-upon value to another party,
Peak
Highest point b4 recession
Recession
Decline,things going bad,usually 6 months
Trough
Worse pt, lowest point b4 expansion
Expansion
Period between end of recession and next peak
Recovery
Beginning of economic expansion
Stagflation
Long/low recession with a decline in gdp and increase in level price
Economic growth
Long time of expansion, increase in GDP
GDP
Gross domestic product,measure of a whole country economic output
CPI
Consumer price Index, average price of g/s consumed by consumers
PPIproduct price index,change in how much money producers spend for g/s and how much you payDepressionSevere downturn in economic activityCapital deepeningPhysical capital, equipment used to produce g/s big contribution to the output of an economyInflationGeneral increase in prices that results in reduction in purchasing power, everything becomes more expensiveDeflationGeneral decline of the price level of g/sSeasonal unemploymentUnemployment based on schedules of vacay,Xmas and Halloween storeFrictional unemploymentWhen ppl take time looking for a job, usually actively searchingStructural unemploymentWhen ppl dont have the skills 4 the job or technology has taken over their job/lack of education, abnormalCyclical unemploymentUnemployment that rises during a recession or depressionFull employmentExists without cyclical unemployment, but with all the other unemploymentsOverqualified for a jobOnly working part time when you should work full time,Okuns ruleEvery 1 percent in unemployment you will have a 2 percent increase in output of growth,we care because the normal amount is 4-6 and the perfect one is 5.2Housing startsConstruction starting in a given period,new owned houses, single family,town houses,apartmentsretail salesMeasure of consumer spending every month,data on dollar value of the retail salesCCIindicates economic growth in which consumers are spending money, indicating higher consumptionWhy is the availability of consumer goods a good indicator of economic health?More goods, then the more consumers spend/more taxes for thr government, no declines and everything is going great.Leading indicator are important?It is important because the steady trend of how the economy is doing weather is healthy or going negatively and the factors telling us whyHow do you keep the business cycle going?investment, interest rates and credit, consumer expectations or consumer confidence, external shocks such as disruptions in the oil supply, war, or natural disasters.Quantity theory2 much money,devalue of the dollarDemand pull theoryInflation resulting from demand of g/sCost push theoryInflation resulting from increased prices due to increase in costsWage price spiralOften occur due to the cost push inflation, is a worsening of conditions due to increase in wagesfiscal yearAfter calendar year, February, 4th quarter most important bc holiday szntrade deficitsituation in which a country imports more than it exports, it can be a lead to a stronger economy/higher level of income Or harm labor markets and create problems of savingsWhy do nations trade?cheaper labor, cost companies more to make it on their own, opportunity cost, etc.absolute advantagethe ability to produce a good using fewer inputs than another producercomparative advantagethe ability to produce a good at a lower opportunity cost than another producertrade barriersTaxes, quotas, and other restrictions on goods entering or leaving a country.Trade wara cycle of increasing trade restrictionstrade surpluswhen a country exports more than it importsdeficitthe amount by which something, especially a sum of money, is too small.import quotaa limit on the number of products in certain categories that a nation can importarguments of protectionismjob protection,infant industry protection,national security,prestige issuesEU and NAFTAEconomic organizations that open trade borders between nations, USA,Canada,MexicoLDCless developed country or nation with a low level of material well being,