Economics Chapter 13 Flashcards

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Questions and Answers

What is frictional unemployment?

Unemployment that occurs when people take time to find a job (correct)

Unemployment caused by seasonal work

Unemployment due to a skills mismatch

Unemployment that occurs because of economic downturns

What causes seasonal unemployment?

Temporary job leaves

Harvest schedules or vacations (correct)

Market fluctuations

Skill mismatches

What is structural unemployment?

Unemployment caused by personal situation changes

Unemployment caused by economic cycles

Unemployment arising from skills mismatch (correct)

Unemployment due to seasonal work

What happens during cyclical unemployment?

Unemployment rises during economic downturns Signup and view all the answers

What is a census?

An official count of the population Signup and view all the answers

What is the unemployment rate?

The percentage of the nation's labor force that is unemployed Signup and view all the answers

What is full unemployment?

The level of employment reached when there is no cyclical unemployment Signup and view all the answers

What does it mean to be underemployed?

Working at a job for which one is over-qualified, or working part-time when full-time work is desired Signup and view all the answers

What is a discouraged worker?

A person who wants a job but has given up looking Signup and view all the answers

What is inflation?

A general increase in prices Signup and view all the answers

What is purchasing power?

The ability to purchase goods and services Signup and view all the answers

What is a price index?

A measurement that shows how the average price of a standard group of goods changes over time Signup and view all the answers

What is the consumer price index (CPI)?

It is determined by measuring the price of a standard group of goods meant to represent the market basket of a typical urban consumer Signup and view all the answers

What is a market basket?

A representative collection of goods and services Signup and view all the answers

What is the inflation rate?

The percentage rate of change in price level over time Signup and view all the answers

What is the core inflation rate?

The rate of inflation excluding the effects of food and energy prices Signup and view all the answers

What is hyperinflation?

Inflation that is out of control Signup and view all the answers

What is the quantity theory of inflation?

Theory that too much money in the economy causes inflation Signup and view all the answers

What is the demand-pull theory?

Theory that inflation occurs when demand for goods and services exceeds existing supplies Signup and view all the answers

What is cost-push inflation?

Theory that inflation occurs when producers raise prices in order to meet increased costs Signup and view all the answers

What is the wage-price spiral?

The process by which rising wages cause higher prices, and higher prices cause higher wages Signup and view all the answers

What is fixed income?

Income that does not increase even when prices go up Signup and view all the answers

What is deflation?

A sustained drop in the price level Signup and view all the answers

What is the poverty threshold?

The income level below which income is insufficient to support a family or household Signup and view all the answers

What is the poverty rate?

The percentage of people who live in households with income below the official poverty line Signup and view all the answers

What is income distribution?

How the nation's total income is distributed among its population Signup and view all the answers

What are food stamps?

Government-issued coupons that recipients exchange for food Signup and view all the answers

What is the Lorenz Curve?

The curve that illustrates income distribution Signup and view all the answers

What is an enterprise zone?

Area where companies can locate free of certain local, state, and federal taxes and restrictions Signup and view all the answers

What is a block grant?

Federal funds given to the states in lump sums Signup and view all the answers

What is workfare?

A program requiring work in exchange for temporary assistance Signup and view all the answers

Study Notes

Types of Unemployment

Frictional Unemployment: Occurs when individuals take time to transition between jobs, often seen in a dynamic labor market.
Seasonal Unemployment: Linked to specific times of the year; influenced by factors like harvest times, holidays, or seasonal industry closures.
Structural Unemployment: Arises when there is a mismatch between workers' skills and the requirements of available jobs, often due to technological or economic changes.
Cyclical Unemployment: Fluctuates with the economy; increases during downturns and decreases when economic conditions improve.

Labor and Employment Metrics

Census: An official count of the population, useful for understanding demographic trends.
Unemployment Rate: Represents the percentage of the labor force that is unemployed, providing a snapshot of economic health.
Full Employment: Achieved when there is no cyclical unemployment, indicating an optimal economic condition.
Underemployment: Refers to individuals working in jobs for which they are overqualified or those who wish to work full-time but are in part-time positions.
Discouraged Worker: Someone who has stopped seeking employment due to a belief that no jobs are available.

Inflation and Price Measurement

Inflation: Defined as the general increase in prices across the economy, impacting purchasing power.
Purchasing Power: Describes the capacity to buy goods and services, directly affected by inflation levels.
Price Index: A tool for measuring how the average price of a standard group of goods changes over time, crucial for tracking inflation.
Consumer Price Index (CPI): A specific price index representing the "market basket" of a typical urban consumer, guiding economic policy.
Market Basket: A representative collection of goods and services used to track price changes.
Inflation Rate: Indicates the percentage increase in price level over a specific time frame.
Core Inflation Rate: Excludes volatile food and energy prices to give a clearer picture of long-term inflation trends.
Hyperinflation: A critical situation where inflation rates soar uncontrollably, often leading to economic collapse.

Theories of Inflation

Quantity Theory: Suggests that excessive money supply in the economy leads to inflation.
Demand-Pull Theory: Inflation occurs when the demand for goods and services surpasses supply.
Cost-Push Theory: Inflation is caused by rising production costs prompting producers to increase prices.
Wage-Price Spiral: The cycle where increasing wages lead to higher prices, which in turn necessitate further wage increases.

Economic Challenges

Fixed Income: Income that remains constant despite rising prices, often affecting retirees or those on pensions.
Deflation: A sustained decrease in the overall price level, potentially leading to economic stagnation.
Poverty Threshold: The income level deemed necessary to support a household; below this level, families face economic hardship.
Poverty Rate: The percentage of the population living below the poverty threshold, indicating levels of economic distress.

Economic Assistance Programs

Income Distribution: Describes how wealth is spread among the population, important for assessing economic equality.
Food Stamps: Government-provided coupons for purchasing food, aimed at supporting low-income individuals.
Lorenz Curve: A graphical representation of income distribution, illustrating economic inequality.
Enterprise Zone: Designated areas exempt from certain taxes and regulations to encourage business development.
Block Grant: Federal funding distributed to states in lump sums for specific purposes.
Workfare: Programs that require participants to engage in work in exchange for temporary assistance, promoting job readiness.

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Test your knowledge with these flashcards covering key unemployment terms from Economics Chapter 13. Each card defines types of unemployment including frictional, seasonal, and structural unemployment to help reinforce your understanding of labor economics.