ECON 203: Test 3
38 Cards in this Set
| Front | Back |
|---|---|
|
Unemployed
|
Individuals who do not currently have a job but who are actively looking for work
|
|
Employed
|
Individuals who currently have jobs
|
|
Labor Force
|
Unemployed plus employed individuals over 16 years old
|
|
Unemployment Rate
|
Percentage of people in the labor force who are unemployed
|
|
Discouraged Workers
|
Former job seekers who have stopped looking for work; not unemployed
|
|
Cyclical Unemployment
|
Associated with increases and decreases in real GDP
|
|
Frictional Unemployment
|
Occurs naturally as people take time to find an appropriate job
|
|
Structural Unemployment
|
Refers to the mismatch between job openings and the skills of workers seeking jobs
|
|
Seasonal Unemployment
|
Occurs when industries slow or shut down for a specific period or make regular shifts in production schedules
|
|
Full Employment
|
Equal to the natural rate of unemployment; not zero unemployment
|
|
Natural Rate of Unemployment
|
Frictional plus structural unemployment; no cyclical unemployment included
|
|
Marginally Attached Workers
|
Individuals who are not actively looking for work but will accept a job if one “appears”; not counted as unemployed
|
|
COLA
|
cost of living adjustment – automatically increases wage/benefit to offset inflation
|
|
Real v. Nominal Calculations
|
real figures have been adjusted for inflation while nominal figures are stated in current dollars
|
|
inflation
|
an increase in overall prices in an economy from one time period to another
|
|
inflation rate
|
the percent increase in prices
|
|
consumer price index
|
a measure of price changes in a group of products typically bought by consumers
|
|
quantity theory
|
inflation may be caused by too much money in circulation; i.e., the money supply grows faster than the economy
|
|
demand-pull theory
|
inflation may be caused by excessive demand; i.e., aggregate demand grows faster than aggregate supply
|
|
cost-push theory
|
inflation may be caused when producers raise prices in order to cover increased costs; can lead to a wage-price spiral
|
|
menu costs
|
associated with physically changing prices
|
|
shoe leather costs
|
associated with additional “wear and tear” to maintain sufficient cash
|
|
deflation
|
a decrease in overall prices in an economy from one time period to another
|
|
indexing
|
statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base period or from the previous month
|
|
GDP
|
Gross Domestic Product -- market value of all goods & services.
|
|
GDP equation
|
C+I+G+(X-M)
|
|
GNP
|
market value of final goods & services produced in country in a year.
|
|
transfer payments
|
not included in GDP. Funds transfered like retirement, SS.
|
|
Comsumption
|
Spending by households on goods and services. Includes spending on things such as cars, food, and visits to the dentist. Makes up 70% of GDP.
|
|
Investment
|
Spending by firms on machinery factories, equipment, tools, and construction of new buildings. Includes households' purchase of new houses. Includes excess business inventory.
|
|
Government
|
Spending by all levels of government of goods and services. Includes spending on the military, schools, and highways. Excludes transfer payments.
|
|
Net Exports
|
(X-M) Spending by people on US goods and services (Exports or X) minus spending by people in the US on foreign goods and services (imports or M).
|
|
Fiscal Policy
|
Changes in federal taxes and federal government spending designed to affect the level of aggregate demand in the economy.
|
|
Discount Rate
|
Fed to bank interest rate
|
|
eserve Requirement
|
Unloanable funds set by the Fed for banks.
|
|
Open Market Operations
|
bank to bank buying/selling of government securities to influence the fed funds rate.
|
|
Stagflation
|
No growth in economy. Inflation and unemployment is a problem at the same time.
|
|
Monetary Policy
|
Stabilize the economy by changing the rate of growth in money supply. in a recession, the Fed increase money supply, which would lead to an increase in aggregate expenditures. In inflation, the Fed reduces money supply.
|
ECON 203: Test 3