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Economics Section 12.1


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Business Cycles
Largely systematic ups and downs of real GDP.
Business Fluctuations
The rise and fall of real GDP over time in a nonsystematic manner.
A period during which real GDP declines for two quarters in a row, or six consecutive months.
The point where real GDP stops going up.
The turnaround point where real GDP stops going down.
A period of recovery from a recession.
Trend Line
A steady growth path in the economy.
A state of the economy with large numbers of people out of work, acute shortages, and excess capacity in manufacturing plants.
Depression Scrip
The currency printed by towns, counties, chambers of commerce, and other civic bodies resorted to printing during the Great Depression.
Econometric Model
A macroeconomic model that uses algebraic equations to describe how the economy behaves.
Index Of Leading Indicators
Monthly statistical series that usually turns down before real GDP turns down, and turns up before GDP turns up.
People available for work who made a specific effort to find a job during the past month and who, during the most recent survey week, worked less than one hour for pay or profit.
Unemployment Rate
The number of unemployed individuals divided by the total number of persons in the civilian labor force.
Frictional Unemployment
Uemployment caused by workers who are between jobs for one reason or another.
Structural Unemployment
Unemployment that occurs when a fundamental change in the operations of the economy reduces the demand for workers and their skills.
Cyclical Unemployment
Unemployment directly related to swings in the business cycle.
Seasonal Unemployment
Unemployment resulting from changes in the weather or changes in the demand for certain products.
Technological unemployment
Unemployment cause when workers with less skills, talent, or education are replaced by machines and other equipment that do their jobs.
Production with mechanical or other processes that reduce the need for workers.
Price Level
The relative magnitude of prices at one point in time.
A decrease in the general price level.
Creeping Inflation
Inflation in the range of 1 to 3 percent per year.
Galloping Inflation
A more intense form of inflation that can go as high as 100 to 300 percent.
Inflation in the range of 500 percent a year and above.
Lorenz Curve
curve that shows how much the actual distribution of income varies from an equal distribution.
Poverty guidelines
Annual dollar amounts used to evaluate the money income that families and unrelated individuals receive.
Economic and social programs that provide regular assistance from the government or private agencies because of need.
Food Stamps
Government-issued coupons that can be redeemed for food.
Earned Income Tax Credit (EITC)
Provides federal tax credits and sometimes cash to low-income workers.
Enterprise zones
Areas where companies can locate free of some local, state, and federal tax laws and other operating restrictions.
A program that requires welfare recipients to exchange some of their labor for benefits.
Negative Income Tax
A proposed type of tax that would make cash payments to certain groups below the poverty line.

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