Chapter 13 Econ

Who runs welfare now?

States-used to be federal but changed cuz cost of living is different in every state

Income inequality

an unequal distribution of income

What does the unemployment rate not measure?

discouraged workers who have stopped looking for work nor the underemployed (those who work part time when they want a full time job or those who work at a job below their skill level)

Food Stamp Program/WIC

gives a card that can be used only to buy food at grocery stores

Lorenz curve

graphically illustrate the degree of income inequality in a nation

Unemployment insurance

helps laid-off workers while looking for a job

Who is hurt by inflation?

lenders, people with fixed incomes, savers

example of seasonal unemployment

lifeguard

How is unemployment calculated?

number of unemployed divided by number in labor force times 100

Medicaid

offers healthcare; AIDS the poor

Poverty threshold

official minimum income needed for the basic necessities of life in the US(also called the poverty line)

Social Security Programs

pays benefits to retirees, survivors, disabled. (FICA)

Earned income tax credit

refunds taxes deducted from paychecks

Cost-of-living adjustment (COLA)

some jobs have salaries that mirror inflation. They negotiate wages that rise with inflation

Who is helped by inflation?

-borrowers -a business where the price of the product increases faster than the price of resources

What are the 3 impacts of inflation?

1) decreased value of money (ppl on fixed income get hurt cuz fixed wage doesn't catch up to value of dollar) 2) increases interest rates (ex: bankers charge more to make money) 3) decreases real return on savings

Full employment

A level of unemployment in which none of the unemployment is caused by decreased economic activity.

Why is a small amount of unemployment inevitable?

Because there will always be people relocating like finding a job that suits the better, or when the available jobs don't match up with the skills of the available workers

How is the poverty threshold calculated?

By finding the cost of nutritionally sound food and multiplying it by 3.

Medicare

CARE for the elderly

what kind of unemployment do we not want/does not occur always?

Cyclical

What are the two types of recession?

Demand-pull inflation and Cost-push inflation

What are the factors affecting the poverty level?

Education-the biggest factor affecting poverty;the higher level of education, the higher the income Discrimination-white men tend to have higher incomes Demographic trends-single parent families are more likely to face economic problems than two-parent families Changes in the labor force-workers in many service jobs tend to earn lower wages than similarly skilled workers in manufacturing

What are the 3 impacts that unemployment has on America/population of America?

Efficiency-it's inefficient and wastes human resources Inequality-doesn't follow equal opportunity rules Discouraged workers-people may begin to lose faith in their abilities to get a job that suits their skills

What 2 types of unemployment are unavoidable?

Frictional and sturctural(these make up the natural rate of unemployment-NRU)

what type of unemployment will we ALWAYS have? Why?

Frictional because people will always be looking for work, leaving job to find another, etc

CPI

Government creates a "market basket" of about 400 typical products-sees change in cost

What are the stages in a wage-price spiral?

Increased wages lead to higher production costs which lead to higher prices and then back to the demand for higher wages

Who started the great society/declared war on poverty?

Lyndon B. Johnson

Is there a universal standard of living?

No. That's why the minimum standard of living varies from country to country

"Creative Destruction"

The workers of structural employment who permanently lose their jobs when new tech replaces jobs. So its creating new jobs and destroying old ones

examples of sturctural unemployment

VCR repairman, carriage makers, etc. Jobs will never go back after new technology is invented

Do you want to have high full employment?

Yes, you want high full employment and low unemployment rate

Deflation

a decrease in the general price level, happens more rarely; deflation hurts businesses

Consumer price index

a measure of changes in the prices of goods and services commonly purchased by consumers

Producer price index

a measure of changes in wholesale prices

Hyperinflation

a rapid, uncontrolled rate of inflation in excess of 50% per month

Poverty

a situation in which a person lacks the income and resources to achieve a minimum standard of living

cost-push inflation

a situation where increases in production costs push up prices; our supply costs are PUSHING up the costs (ex: oil or electricity starts costing more)

Sturctural unemployment

a situation where jobs exist but workers looking for work don't have the necessary skills for these jobs

demand-pull inflation

a situation where total demand is rising faster than the production of goods and services; demand is PULLING up the price because people are buying too much

Inflation

a sustained rise in the level of prices generally or a sustained fall in the purchasing power of money; rise in prices and fall in the value of money

Examples of frictional unemployment

college or college graduates looking for jobs or individuals who were fired and looking for a better job

frictional unemployment

temporary unemployment experienced by people changing jobs

Poverty rate

the percentage of people living in households that have incomes below the poverty threshold

unemployment rate

the percentage of the labor force that is jobless and actively looking for work

Inflation rate

the rate of change in prices over a set period of time

What does the unemployment rate measure?

the total number of workers in the civilian labor force and the unemployed people. 16+ years old, able and willing to work, not institutionalized (jail,hospital,etc), and not in military, full time school, or retired

income distribution

the way income is divided among people in a nation

cyclical unemployment

unemployment caused by a part of the business cycle with decreased economic activity. results from recession

seasonal unemployment

unemployment linked to seasonal work

Difference between welfare and workfare

welfare are all the programs that help the poor whereas workfare requires welfare recipients to do some work(federal programs changed to welfare-to-work in 1996)