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Econ Ch. 14


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the total economy
the study of the total economy
the study of individual aspects within the total economy
thotal output in an economy
Gross Domestic Product (GDP)
all people age 16 and o ver who are working for pay or actively seeking employment
labor force
the ratio of the number of people in the labor force ot the number of people age 16 or over in the population
labor force participation rate
the percentage of the labor force that is unemployed
unemployment rate
a person aged 16 or over who is actively seeking employment but who is unable to find a job
umemployed person
people who would like to work, but have become so discouraged in the job search that they have stopped actively seeking employment
discouraged workers
temporary unemployment due to a normal time delay when a person seeks a first job, changes jobs, or reenters the labor force after an absence
frictional unemployment
unemployment that results from structural changes in our economy, such as changes in demand or technology
structural unemployment
unemployment that results from a drop in economic activity in our economy as a whole
cyclical unemployment
a situation in which there is no cyclical unemployment; all unemployment is frictional or structural
full employment
a legally imposed minimum price (wage) for labor
minimum wage
a legally imposed minimum price for a good or service
price floor
a federal income tax credit for low-income workers and families
earned income tax credit (EITC)
a rise in the average price level
a decrease in the average price level
a weighted average of the prices of a fixed basket of goods and services purchased by a typical urban household
consumer price index (CPI)
an adjustment that automatically increases incomes or benefits when the average price level rises
cost of living adjustment (COLA)
the direct exchange of goods and services for other goods and services rather than for money
extremely high inflation, whereby money becomes almost worthless
the costs associated with reprinting menus, revising cost schedules, adjusting telephones and vending machines, and so on, when inflation occurs
menu costs
inflation that occurs when any sectors of the economy increase their demand for goods and services
demand-pull inflation
inflation that occurs as a result of increases in the costs of production
cost-push inflation
inflation that occurs when businesses use market power to restrict output in order to push up prices and profits
profit-push inflation

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