Measuring Economic Performance

unemployed rate

((number of unemployed) / (labour force)) * 100

income inequality exists because:

- education levels vary - wealthy can afford college easier - discrimination - different abilities - access / location

cost-push inflation

-cost of producing goods rises causing AS to decrease (Stagflation- abnormal contraction)

Demand-Pull Inflation

-increase in AD causes price levels to rise -AD is greater than AS *too many dollars chasing too few goods (Expansion)

Full Unemployment Rate is reached when unemployment rate drops below...

5%

full employment is reached when the unemployment rate drops below...

5%

To see the actual distribution of income varies from equal distribution, an economist would use...

A Lorenz curve

Deflation

A decline in the general level of prices

Inflation

An increase in the general level of prices

A shoe manufacturer buys leather to buy shoes. The leather is considered what?

An intermediate good

rising unemployment and inflation are forms of what?

Economic instability

rising unemployment and inflation are forms of...

Economic instability

Frictional unemployment means that the workers skills do not match the jobs available in the economy. Workers must retrain and learn new skills. True or False?

False

In the event of inflation, a retired school teacher with a fixed pension would would not be hurt. True or False

False

The consumer price index (CPI) measures changes in price of consumer goods before they reach the retail level True or False?

False

The consumer price index (CPI) is a measure of what?

General price levels

full employment

Highly productive and efficient (under 6%)

Which of the following would not be included in real GDP? - paper/ financial transactions - government spending - consumer spending - investments made by a business

Paper / financial transactions

Economic growth

Producing more goods & services (RGDP about 3%)

Which of the following is a good example of an intermediate good? - purchase a new car - purchase a new lawnmower - purchase a new radio - purchase of leather to make shoes

Purchase of leather to make shoes

The single best measurement of the overall performance of the American economy and our standard of living is...

Real GDP

price stability

Requires slow rate of inflation (under 3%)

A construction worker cannot work during the winter because of the winter storm. He is...

Seasonally unemployed

The Lorenz curve

Shows how much ACTUAL distribution of income varies from EQUAL distribution

A receptionist loses his job when a computerized voice system is installed. He is...

Structurally unemployment

Cyclical unemployment occurs when jobs gained and lost in connection with the business cycle (during recession/ contraction jobs are lost, during expansion jobs are regained.) True or False?

True

In the event of inflation, a couple that buys a house with a 15 year fixed loan rate would be helped. True or False?

True

In the event of inflation, an employee in the technology industry that signs a contract with an annual COLAs would be helped. True or False?

True

Normal GDP is the current dollar value of the nations output with no adjustment for inflation. True or False?

True

Stagflation is the combination of inflation and unemployment, and leads to cost-push inflation. True or False?

True

Higher prices cost workers to get raises, causes producers to raise prices, is the...

Wage-price Spiral

The burden on high inflation falls most heavily on...

Workers on fixed income

A family who buys a home with a fixed rate mortgage

Would NOT hurt them

cyclical unemployment

loss of jobs by individuals during a recession and the corresponding slowdown in production

structural unemployment

unemployment that occurs when workers' skills do not match the jobs that are available

macroeconomic equilibrium is achieved when..

Aggregate demand intersects aggregate supply

Too many dollars chasing too few goods

Demand-pull inflation

CPI stands for

Consumer price index

An immediate effect of inflation is...

Decline in the purchasing power of the dollar

The immediate effect of inflation is the...

Decline of the purchasing power of the dollar

seasonal unemployment

state of being out of work because of the time of year

frictional unemployment

temporary unemployment of people changing jobs