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9.20: Glossary: Macroeconomic Measures of Performance

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    adverse selection of wage cuts argument
    if employers reduce wages for all workers, the best will leave
    cyclical unemployment
    unemployment closely tied to the business cycle, like higher unemployment during a recession
    depreciation
    the process by which capital ages over time and therefore loses its value
    discouraged workers
    those who have stopped looking for employment due to the lack of suitable positions available
    double counting
    a potential mistake to be avoided in measuring GDP, in which output is counted more than once as it travels through the stages of production
    durable good
    long-lasting good like a car or a refrigerator
    efficiency wage theory
    the theory that the productivity of workers, either individually or as a group, will increase if they are paid more
    final good and service
    output used directly for consumption, investment, government, and trade purposes; contrast with “intermediate good”
    frictional unemployment
    unemployment that occurs as workers move between jobs
    gross domestic product (GDP)
    the value of the output of all goods and services produced within a country in a year
    gross national product (GNP)
    includes what is produced domestically and what is produced by domestic labor and business abroad in a year
    implicit contract
    an unwritten agreement in the labor market that the employer will try to keep wages from falling when the economy is weak or the business is having trouble, and the employee will not expect huge salary increases when the economy or the business is strong
    insider-outsider model
    those already working for the firm are “insiders” who know the procedures; the other workers are “outsiders” who are recent or prospective hires
    intermediate good
    output provided to other businesses at an intermediate stage of production, not for final users; contrast with “final good and service”
    inventory
    good that has been produced, but not yet been sold
    labor force participation rate
    this is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job
    Lorenz curve
    a graph that compares the cumulative income actually received to a perfectly equal distribution of income; it shows the share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis
    national income
    includes all income earned: wages, profits, rent, and profit income
    natural rate of unemployment
    the unemployment rate that would exist in a growing and healthy economy from the combination of economic, social, and political factors that exist at a given time
    net national product (NNP)
    GNP minus depreciation
    nondurable good
    short-lived good like food and clothing
    out of the labor force
    those who are not working and not looking for work—whether they want employment or not; also termed “not in the labor force”
    relative wage coordination argument
    across-the-board wage cuts are hard for an economy to implement, and workers fight against them
    service
    product which is intangible (in contrast to goods) such as entertainment, healthcare, or education
    structure
    building used as residence, factory, office building, retail store, or for other purposes
    structural unemployment
    unemployment that occurs because individuals lack skills valued by employers
    trade balance
    gap between exports and imports
    trade deficit
    exists when a nation’s imports exceed its exports and is calculated as imports –exports
    trade surplus
    exists when a nation’s exports exceed its imports and is calculated as exports – imports
    underemployed
    individuals who are employed in a job that is below their skills
    unemployment rate
    the percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs
    quintile
    dividing a group into fifths, a method often used to look at distribution of income 
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