Macroeconomics - 2HH3 - Chapter 3

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six factors of production

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Macroeconomics - 2HH3Chapter 3Business Cycle Measurement

Key Terms

average labour productivity

total output divided by labour input

real wage

the purchasing power of the wage earned per hour worked

reverse Philips Curve

a negative correlation between a money price or rate of change inmoney price, and a measure of aggregate economic activity

Philips Curve

a positive correlation between a money price or the rate of change ina money price, and a measure of aggregate economic activity

standard deviation

the cyclical variablity in an economic time series can bemeasured by the standard deviation of the precentagedeviations from trend

a measure of variability

composite index of business leading indicatorsor index of leading indicators

a wieghted average of leading macroeconomic variables,which is sometimes used to forecast the deviations of realGDP from trend

coincident variable

an economic variable that neither leads nor lags real GDP

lagging variable

an economic variable that past real GDP helps to predict

leading variable

a economic variable that helps to predict future real GDP

perfectly negatively correlated

describes two variables that have a correlation coefficient of -1

perfectly positively correlated

describes two variables that have a correlation coefficient of 1

correlation coefficient

a measure of the degree of correlation between two variables

acyclical

describes an economic variable that is niether procyclical nor countercyclical

countercyclical

describes an economic variable that trends to be below (above) trendwhen real GDP is above (below) trend

procyclical

describes an economic variable that tends to be above (below) trendwhen real GDP is above (below) trend

scatter plot

a plot of two variables, x and y, with x measured on the horizantal axis,and y measured on the vertical axis

negative correlation

relationship between two economic time series when astraight line fit to a scatter plot of the two variables hasa negative slope

positive correlation

relationship between two economic time series when astraight line fit to a scatter plot of the two variables hasa positive slow

time series

sequential measurements of an economic variable over time

comovement

how aggregate economic variables move together over thebusiness cycle

persistent

describing an economic time series that tends to stay above(below) when it has been above (below) trend during the recentpast

recession

a series of negative deviations from trend in real GDP,culminating in a trough

boom

a series of positive deviations from trend in real GDP,culminating in a peak

frequency

the number of peaks in an economic trime series thatoccur per year

amplitute

the maximum deviation from trend in an economictime series

turning points

peaks and troughs in real GDP

trough

a relatively large negative devation from trend in realGDP

peak

a relatively large positive devation from trend in real GDP

business cycles

fluctiations about the trent in read GDP

Comovement Summary

Labour Market Variables

Nominal Variables

The Components of GDP

Comovement

Regularities in GDP Fluctuations