Economics Chapter 14 Review

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a depression

A severe recession with high unemployment, acute shortages, and excess manufacturing capacity is known as

technologically unemployed

A telephone receptionist loses his job when a computerized voice mail system is installed at his office. He is

cyclical unemployment

During swings in the business cycle, _____________ may increase because certain industries will lay off workers until the business climate improves.

creeping

During the late 1990s, the United States experienced ________ inflation, at a rate of about 3 percent per year.

rise

Economists calculate the inflation rate by dividing the _________ in price level by the beginning price level and multiplying by 100.

unemployment rate

Ideally, the ________ will remain under 5%, which indicates nearly full employment.

a diagonal line

If all families received exactly the same income, the Lorenz curve would appear as

galloping inflation

If inflation reaches 100 to 300 percent, the economy is in a state of _____________.

depression

If the economy reaches a state in which large numbers of people are out of work, there are shortages of consumer products, and manufacturing plants sit idle, it is clear that the economy is in a __________.

rate

Inflation can cause the _______ of income to change.

enterprise zones

Many cities establish ________ to encourage businesses to locate in poorer sections of the region so that jobs will become available to the working poor.

workfare

Many states have set up ________, programs that require people receiving welfare to provide labor in exchange for benefits.

implicit

The CPI, ______ GDP price deflator, and producer price index can all be used to measure inflation.

Lorenz

The ________ curve shows how much the actual distribution of income varies from an equal distribution of income.

welfare

The broad term for economic and social programs that provide regular assistance for people in need is _________.

fifths

The distribution of income is measured by ranking family incomes from lowest to highest, and then dividing the ranking into _________.

food stamps

The government issues ________ to ensure that people living in poverty receive enough food to eat.

grown

The income gap has ________ since the 1980s.

a growth in monopoly power

The income gap has widened since 1980 for all of the following reasons EXCEPT

is used to predict changes in business cycles

The index of leading indicators

some workers are "between jobs" for one reason or another.

The unemployment rate understates employment conditions for all of the following reasons EXCEPT

education

The unequal distribution of income is caused by __________ levels, wealth, discrimination, ability, and monopoly power.

his or her income is below a certain level

To an economist, an individual is living in poverty if

5%

To an economist, full employment is reached when the unemployment rate drops below

recession and expansion

What are the two phases of the business cycle?

seasonally unemployed

When a construction worker cannot work because of a winter snowstorm, he is

recession

When the GDP declines for six months in a row, economists know the economy is in a _________.

massive government spending for wartime goods

Which of the following factors did NOT contribute to the Great Depression?

economic growth

Which of the following is NOT a reason for income inequality?

deflation

a decrease in the general price level

workfare

a program that requires welfare recipients to provide labor in exchange for benefits

poverty guidelines

annual dollar amounts used to evaluate the money income that families and unrelated individuals receive

welfare

economic and social programs that provide regular assistance from the government or private agencies because of need

food stamps

government-issued coupons that can be redeemed for food

Lorenz curve

graph that illustrates how much the actual distribution of income varies from an equal distribution

creeping inflation

inflation in the range of 1 to 3 percent per year

hyperinflation

inflation in the range of 500 percent a year and above

galloping inflation

intense form of inflation that can go as high as 100 to 300 percent per year

business fluctuations

nonsystematic upturns and downturns of real GDP

unemployment rate

number of unemployed persons divided by the total number of persons in the civilian labor force

structural unemployment

occurs when a fundamental change in the operations of the economy reduces the demand for workers and their skills

technological unemployment

occurs when workers will less skills, talent, or education are replaced by machines that do their jobs

recession

period during which real GDP declines for two quarters in a row, or six consecutive months

trough

point in the business cycle when real GDP stops decreasing

peak

point in the business cycle when real GDP stops increasing

price level

the relative magnitude of prices at one point in time

divide the change in the price level by the beginning price level and multiply by 100.

to calculate the inflation rate, economists

frictional unemployment

unemployment caused by workers who are "between jobs"

cyclical unemployment

unemployment directly related to swings in the business cycle

cost push

An economist who attributes inflation to the increasing prices of producer inputs is holding to the _________ theory of inflation.

more than 30 million

About how many Americans are currently living in poverty?

demand-pull effect

According to the excessive monetary growth theory of inflation, extra money in the economy is spend, leading to a

expansion

After the GDP bottoms out, the economy moves into a period of _________, which is the second phase of the business cycle.

interest rates decrease

All of the following are consequences of inflation EXCEPT

cost-pull.

All of the following are theories regarding the cause of inflation EXCEPT

business fluctuations

All of the following factors contribute to business cycles EXCEPT

deflation

Although ________ is very rare, prices of goods did decrease during the Great Depression.

cyclically unemployed

An assembly line worker in an automobile plant is laid off during a recession. She is

wage-price spiral theory of inflation

An economist who attributes inflation to no single group is holding to the

business cycles

systematic upturns and downturns of real GDP


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