Economics Vocab – Flashcards with Answers
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technological unemployment
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kind of unemployment that is caused when workers with few skills are replaced by machines that do their jobs
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cyclical unemployment
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kind of unemployment related to swings in the business cycles
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depression
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state of the economy with large numbers of people out of work, acute supply shortages, and excess capacity in manufacturing plants
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workfare
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program that requires welfare recipients to exchange some of their labor for benefits
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recession
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period during which real GDP declines for two quarters in a row, or six consecutive months
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negative income tax
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alternative that encourages work and guarantees each person a minimum level of income
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seasonal unemployment
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kind of unemployment that results from changes in the weather or in the demand for certain products and that takes place every year regardless of the health of the economy
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frictional
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kind of unemployment caused by workers who are "between jobs" for one reason or another
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business cycle
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ups and downs of real GDP
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structural unemployment
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kind of unemployment that occurs when a fundamental change in the economy reduces the demand for workers and their skills
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trough
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turnaround point where real GDP stops going down
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creeping inflation
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rise in prices ranging from 1 to 3 percent per year
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deflation
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a decrease in the general price level
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econometric model
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kind of model that uses algebraic equations to describe how the economy behaves
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time deposit
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interest-bearing deposit that cannot be withdrawn by check
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monetary policy
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controlling the expansion and/or contraction of money supply
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legal reserves
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coins, currency, and deposits an institution must have
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currency
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paper component of the money supply
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liabilities
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debts and obligations
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monetizing the debt
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creating enough money to offset deficit spending
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creditor
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person or institution to whom money is owed
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member bank
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bank that belongs to the Federal Reserve System
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coins
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pennies, nickels, dimes, and quarters
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open market operations
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buying and selling government securities in financial markets
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prime rate
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best or lowest interest rate commercial bankers charge their customers
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easy money policy
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allowing money supply to grow and interest rates to fall
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liquidity
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can be converted to cash in a short time
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excess reserves
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cash and currency not needed
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assets
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properties, possessions, and claims on others
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tariff
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tax placed on imports
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revenue tariff
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tax designed to raise money
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protective tariff
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tax place high enough to protect domestic industry
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balance of payments
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difference between money paid to and received from other nations
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foreign exchange
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other countries' currencies
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fixed exchange rate
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price of one country's currency set in terms of another country's currency
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protectionist
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one who favors trade barriers
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trade deficit
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more spent on imports than earned on exports
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absolute advantage
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a country's ability to produce more of a given product than another country
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infant industries argument
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belief that new businesses should be protected from foreign competition
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glut
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substantial oversupply
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nonrenewable resources
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fossil fuels and other substances that may only last a few more generations
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embargo
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restriction on the export or import of a commodity in trade
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pollution
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contamination of air, water, or soil by the discharge of poisonous or noxious substances
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subsistence
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circumstance in which a population produces only enough to support itself
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cost-benefit analysis
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a process that involves comparing the costs of an action to its benefits
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gasohol
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fuel that is a mixture of 90 percent unleaded gasoline and 10 percent ethanol
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acid rain
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mixture of water and sulfur dioxide that makes a mild form of sulfuric acid
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pollution permit
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federal license that allows public utilities to release pollutants into the air
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aquifers
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underground water-bearing rock formations that supply 40 percent of the water used by farms
