Economics – Unit 5 Study Guide (Chapters 12 ; 13) – Flashcards
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Approximately how much total income does a family of four need to have to be considered above the poverty line?
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$23,850
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Define the unemployment rate
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the % of labor force that does not have a job
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How can changes in technology or consumer demand make it difficult for people to get jobs?
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Their skills and education may no longer be useful
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How can we measure technological progress?
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By productivity; how much each laborer can produce
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How does an economist calculate GDP for one year using the expenditure approach?
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By adding up all the spending by consumers, businesses, government, and foreigners
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How does an economist compare the standard of living in two different countries?
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By using per capita (for each person) real GDP
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How does the U.S. Census Bureau define a family?
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It consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption, residing in the same housing unit
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How long can a family collect aid from the Temporary Assistance for Needy Families program?
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60 months in a lifetime
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How much of the nation's wealth is controlled by the forty percent of the population with the lowest income?
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28%
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How often does the United States government conduct a census?
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Every 10 years
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If a person has money invested at 10 percent and the rate of inflation is 6 percent, how much return are they actually making on their investment?
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4 percent (4%)
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If over a nine-month period unemployment is continuing to increase, and GDP growth continues to fall, what could you infer about the economy?
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It is probably in a recession
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If the government prints money to try to fix a financial collapse, what type of inflation might possibly result?
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Demand-pull inflation
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An individual is a victim of what type of unemployment if he works in a factory that makes answering machines and loses his job due to the advancement of cell phones?
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Structural unemployment
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The largest sector of the macroeconomy is ...
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Consumption; spending by households
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The rate of interest stated in current values is called what?
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Nominal interest rate
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What age group in the U.S. has the largest percentage of its members living in poverty?
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Children
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What are intermediate goods?
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Goods used to make final goods
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What are nondurable goods?
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Consumer goods that are used up and replaced relatively frequently
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What are the benefits of long-term economic growth?
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Higher standard of living for the people of the economy
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What are the causes of inflation?
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More money chasing fewer goods and services; an increase in the cost of production
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What are the causes of poverty in the U.S.?
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Lack of education, location, racial and gender discrimination, economic shifts, shifts in family structure (for example, absent father)
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What are the leading economic indicators supposed to predict?
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Movement of real GDP
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What are the sources of long-term economic growth?
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Increases in productivity, technological innovation
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What happens to consumer and business spending when the interest rates go up?
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They decrease
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What can changes in technology and consumer tastes do to unemployment?
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They can cause structural unemployment as the economy shifts
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What do we call the level of unemployment reached when there is no cyclical unemployment, but frictional, seasonal, and structural unemployment still exist?
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Full unemployment, or the Natural Rate of Unemployment
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What do we call unemployment that is directly related to swings in the business cycle?
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Cyclical unemployment
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What does price level measure on an aggregate demand curve?
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Inflation
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What does the Lorenz Curve illustrate about the economy?
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The Distribution of income
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What finally brought the U.S. economy out of the Great Depression?
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World War II
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According to the demand-pull theory, what is inflation caused by?
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Too much money chasing too few goods
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What is labor productivity?
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How much stuff a worker can produce
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What is nominal GDP?
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GDP measured in currency dollar values
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What is the business cycle?
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The fluctuation of the general performance of the economy over long periods of time
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What is the Consumer Price Index?
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A measure of inflation using a market basket of goods purchased by the average urban consumer
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What is the cost-push theory?
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Inflation is caused by an increase in resource prices/production costs
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What is the difference between real GDP and nominal GDP?
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Nominal GDP measures GDP in current prices (not adjusting for inflation), while real GDP measures GDP in inflation-adjusted dollars.
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What is the GDP?
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It is a basic economic statistic; a measure of how much stuff an economy produces in a given time period, usually a year
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What is the term economists use to describe rapid, uncontrolled inflation?
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Hyperinflation
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What is the underground economy?
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Unreported and/or illegal economic activity
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What is underemployment?
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Being more educated/skilled than a job requires
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What marked the beginning of the Great Depression in 1929?
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The collapse of the stock market in October
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What theory says that inflation occurs when the demand for goods exceeds the existing supply?
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Demand-pull inflation
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What typically happens to the inflation rate when unemployment falls to very low levels?
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It increases
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What was the major change in the U.S. economy in the 1990s?
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We started shifting to a service-oriented economy
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What were the lasting effects of the OPEC embargo in the 1970s on the U.S. economy?
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High levels of inflation
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Why don't government planners try to end seasonal unemployment?
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They can't stop the changing of the seasons
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Why is the aggregate supply curve vertical on the right end?
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It is vertical at the full-employment production level
