Econ Chapter 7 – Flashcards
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Unemployment
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The total number of adults aged 16 or older who are willing and able to work and who are actively looking for work but have not found a job.
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Labor Force
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Individuals 16 and over who either have jobs or are looking and available for jobs; the number of employed plus the number of unemployed.
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Stock
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The quantity of something, measured at a given point in time-for example, an inventory of goods or a bank account. ___ are defined independently of time, although they are assessed at a point in time.
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Flow
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A quantity measured per unit of time; something that occurs over time, such as the income you make per week or per year or the number of individuals who are fired every month.
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Job Loser
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An individual in the labor force whose employment was involuntary terminated.
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Reentrant
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An individual who used to work full time but left the labor force and has now reentered looking for a job.
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Job Leaver
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An individual in the labor force who quits voluntarily.
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New Entrant
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An individual who has never held a full-time job lasting 2 weeks or longer but is now seeking employment.
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Discouraged Workers
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Individuals who have stopped looking for a job because they are convinced that they will not find a suitable one.
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Labor Force Participation Rate
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The percentage of noninstitutionalized working-age individuals who are employed or seeking employment.
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Frictional Unemployment
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Unemployment due to the fact that workers must search for appropriate job offers. This takes time, and so they remain temporarily unemployed.
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Structural Unemplyment
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Unemployment resulting from a poor match of workers abilities and skills with current requirements of employers.
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Cyclical Unemployment
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Unemployment resulting from business recessions that occur when total demand is insufficient to create full employment.
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Seasonal Unemployment
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Unemployment resulting from the seasonal pattern of work in specific industries. It is usually due to seasonal fluctuations in demand or to changing weather conditions, rendering work difficult, if not impossible, as in agriculture and construction.
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Full Employment
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An arbitrary level of unemployment that corresponds to "normal" friction in the labor market. In 1986, a 6.5 percent rate of unemployment was considered _____. Today, it is assumed to be 5% or less.
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Natural Rate of Unemployment
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The _________ that is estimated to prevail in long-run macroeconomic equilibrium, when all workers and employers have fully adjusted to an economic changes.
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Inflation
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The situation in which the average of all prices of goods and services in an economy is rising.
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Deflation
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The situation in which the average of all prices of goods and services in an economy is falling.
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Purchasing Power
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The value of money for buying goods and services. If your money income stays the same but the price of one good that you're buying goes up, your effective purchasing power falls, and vice versa.
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Price Index
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The cost of today's market basket of goods expressed as a percentage of the cost of the same market basket during a base year.
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Base Year
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The year that is chosen as the point of reference for comparison of prices in other years.
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Consumer Price Index
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A statistical measure of a weighted average of prices of a specified set of goods and services purchased by wage earners in urban areas.
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Producer Price Index
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A statistical measure of a weighted average of prices and goods and services that firms produce and sell.
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GDP Deflator
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A price index measuring the changes in prices of all new goods and services produced in the economy.
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Anticipated Inflation
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The inflation rate that we believe will occur; when it does, we are in a situation of fully _______.
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Unanticipated Inflation
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Inflation at a rate that comes as a surprise, either higher or lower than the rate anticipated.
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Nominal Rate of Interest
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The market rate of interest expressed in today's dollars.
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Real Rate of Interest
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The nominal rate of interest minus the anticipated rate of inflation.
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Cost Of Living Adjustments
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Clauses in contracts that allow for increased in specified nominal values to take account of changes in the cost of living.
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Repricing
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Also called cost of inflation or menu; the cost associated with recalculating prices and printing new price lists when there is inflation.
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Business Fluctuations
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The ups and downs in overall business activity, as evidence by changes in national income, employment, and the price level.
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Expansion
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A business fluctuation during which the pace of national economic activity is slowing down.
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Contraction
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A business fluctuation during which the pace of national economic activity is slowing down.
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Recession
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A period of time during which the rate of growth of business activity is consistently less than its long-term trend or is negative.
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Depression
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An extremely severe recession.
