macroeconomics
the study of problems that affect the economy as a whole (lack of growth, unemployment, recessions, and inflation) and what to do about them.
classical economists
believe business cycles are temporary glitches, and generally favor laissez-faire, or nonactivist politics
keynesian economists
believe that business cycles reflect underlying problems that can be addressed with activist government policies
potential output
the highest amount of output an economy can sustainably produce and sell using existing production processes and resources
per capita output
output divided by the total population
recession
a decline in real output that persists for more than two consecutive quarters of a year
expansion
an upturn that lasts at least two consecutive quarters a year
structural stagnation
a cyclical downturn that we do not expect to end any time soon with major changes in the structure of the economy
unemployment rate
the percentage of people in the economy who are willing and able to work but who cannot find jobs
cyclical unemployment
unemployment that results from fluctuations in the economic activity
structural unemployment
unemployment caused by the institutional structure of an economy or by economic restructuring making some skills obsolete
target rate of employment
the lowest sustainable rate of unemployment that policy makers believe is achievable under existing conditions
full employment
an economic climate where nearly everyone who wants a job has one
frictional unemployment
unemployment caused by people entering the job market and people quitting a job just long enough to look for and find another job