Key Concepts

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

inflation
price level
disinflation
deflation
consumer price index (CPI)
producer price index (PPI)
GDP deflator
hyperinflation
labor force
discouraged workers
frictional unemployment
structural unemployment
cyclical unemployment
natural rate of unemployment
A measure of the average changes in the prices received by domestic producers for their output
Unemployment that results from changes in the business cycle, and where public policymakers can have their greatest impact by keeping the economy on a steady, lowinflationary, solid growth path
An index of the average prices for all goods and services in the economy, including consumer goods, investment goods, government goods and services, and exports. It is the broadest measure of inflation in the national income and product accounts (NIPA)
Unemployment caused by changes in the structure of consumer demands or technology. It means that demand for some products declines and the skills of this industry’s workers often become obsolete as well. This results in an extended bout of unemployment while new skills are developed
To continue to be counted as unemployed, those without work must actively seek work (apply for jobs, interview, register with employment services, etc.). Discouraged workers are those who have given up actively looking for work and, as a result, are not counted as unemployed
The absolute level of a price index, whether the consumer price index (CPI; retail prices), the producer price index (PPI; wholesale prices), or the GDP deflator (average price of all items in GDP)
Unemployment for any economy that includes workers who voluntarily quit their jobs to search for better positions, or are moving to new jobs but may still take several days or weeks before they can report to their new employers
An extremely high rate of inflation; above 100% per year
A measure of the average change in prices paid by urban consumers for a typical market basket of consumer goods and services
The total number of those employed and unemployed. The unemployment rate is the number of unemployed divided by the labor force, expressed as a percent
A reduction in the rate of inflation. An economy going through disinflation is still facing inflation, but at a declining rate
That level of unemployment at which price and wage decisions are consistent; a level at which the actual inflation rate is equal to people’s inflationary expectations and where cyclical unemployment is zero
A decline in overall prices throughout the economy. This is the opposite of inflation
A measure of changes in the cost of living. A general rise in prices throughout the economy
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