As this intensifies, the price level may begin to rise before full employment and full-capacity production return.persons 16 years of age and older who are not in institutions and who are employed or are unemployed (and seeking work).the percentage of the labor force unemployed at any time.Employees who have left the labor force because they have not been able to find employment.A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.unemployment of workers whose skills are not demanded by employers, who lack sufficient skills to obtain employment, or who cannot easily move to locations where jobs are available.A type of unemployment caused by insufficient total spending (or by insufficient aggregate demand).the unemployment rate at which there is no cyclical unemployment of the labor force; equal to between 4 and 5 percent in the United States because some frictional and structural unemployment is unavoidable.the full-employment unemployment rate; the unemployment rate occurring when there is no cyclical unemployment and the economy is achieving its potential output; the unemployment rate at which actual inflation equals expected inflation.the real output (GDP) an economy can produce when it fully employs its available resources.the amount by which actual gross domestic product falls below potential output.the generalization that any 1-percentage-point rise in the unemployment rate above the full-employment unemployment rate will increase the GDP gap by 2 percent of the potential output (GDP) of the economy.a rise in the general level of prices in an economy.Increases in the price level (inflation) resulting from an excess of demand over output at the existing price level, caused by an increase in aggregate demand.Increases in the price level (inflation) resulting from an increase in resource costs (for example, raw-material prices) and hence in per-unit production costs; inflation caused by reductions in aggregate supply.the average production cost of a particular level of output; total input cost divided by units of output.the number of dollars received by an individual or group for its resources during some period of time.the amount of goods and services that can be purchased with nominal income during some period of time; nominal income adjusted for inflation.increases in the price level (inflation) that occur at the expected rate.increases in the price level (inflation) at a rate greater than expected.an automatic increase in the income (wages) of workers when inflation occurs; guaranteed by a collective bargaining contract between firms and workers.the interest rate expressed in dollars of constant value (adjusted for inflation) and equal to the nominal interest rate less the expected rate of inflation.the interest rate expressed in terms of annual amounts currently charged for interest and not adjusted for inflation.A very rapid rise in the price level; an extremely high rate of inflation.a schedule showing the amounts households plan to spend for consumer goods at different levels of disposable income.a schedule that shows the amounts households plan to save (plan not to spend for consumer goods), at different levels of disposable income.the level of disposable income at which households plan to consumer (spend) all their income and to save none of it; also, in an income transfer program, the level of earned income at which subsidy payments become zero.Fraction (or percentage) of disposable income that households plan to spend for consumer goods and services; consumption divided by disposable income.Fraction ( or percentage) of disposable income that households save; saving divided by disposable income.the fraction of any change in disposable income spent for consumer goods; equal to the change in consumption divided by the change in disposable income.the fraction of any change in disposable income that households save; equal to the change in saving divided by the change in disposable income.the tendency for people to increase their consumption spending when the value of their financial and real assets rises and to decrease their consumption spending when the value of those assets falls.the increase in profit a firm anticipates it will obtain by purchasing capital (or engaging in research and development); expressed as a percentage of the total cost of the investment (or R&D) activity.the interest rate expressed in dollars of constant value (adjusted for inflation) and equal to the nominal interest rate less the expected rate of inflation.a curve that shows the amounts of investment demanded by an economy at a series of real interest rates.a curve or schedule that shows the amounts firms plan to invest at various possible values of real gross domestic product.a schedule or curve showing the total amount spent for final goods and services at different levels of real GDP.the level at which the total quantity of goods produced (GDP) equals the total quantity of goods purchased (C + Ig ).a line along which the value of GDP (measured horizontally) is equal to the value of aggregate expenditures (measured vertically).
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Formula: = è å å á ç å å 100 Using the CPI to find the Inflation Rate: CPI – 100 = inflation rate % o Anticipated and Unanticipated Inflation: Anticipated Inflation: The rate of inflation that consumers, the government and business believe will occur.
The price level is likely to rise during this phase.a period of declining real GDP, accompanied by lower real income and higher unemployment.At this phase, output and employment "bottom out" at their lowest levels.
AE = C + I + G + NX.
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Study these formulas and make sure you're ready for your next AP, IB, or College Principles Exam.
But this logic makes little sense in the long run: If you want the economy to grow in the long run, you want less consumption and more saving. Example: To determine the number of years it will take for the price level to double, divide 70 by the annual rate of inflation.a measure of average output or real output per unit of input. some equations for unit 2. inflation sloes but price-level is still increasing)a weighted measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services1.
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