Chapter 13: Economic Challenges
inflation
A rise in the general level of prices in an economy.
deflation
A situation in which prices are declining
frictional unemployment
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
seasonal unemployment
A type of unemployment that occurs when the demand for labor in certain industries changes on a seasonal basis because of variations in needs.
Lorenzo Curve
Represents the inequality of income distribution
wage-price spiral
Rising wages cause higher prices, and higher prices cause higher wages
quantity theory
Theory that too much money in the economy causes inflation
structural unemployment
Unemployment that occurs when workers skills do not match the jobs that are available
price index
a measurement that shows how the average price of a standard group of goods changes over time
Consumer Price Index
a price index determined by measuring the price of a standard group of goods meant to represent the "market basket" of a typical urban consumer
workfare
a program requiring work in exchange for temporary assistance
market basket
a representative collection of goods and services
poverty threshold
an income level below that which is needed to support families or households
enterprise zone
area where companies can locate free of certain local, state, and federal taxes and restrictions
block grant
federal funds given to the states in lump sums
food stamp program
federally funded program that gives food coupons to low-income people based on income and family size
income distribution
how the nation's total income is distributed among its population
fixed income
income that does not increase even when prices go up
hyperinflation
inflation that is out of control
poverty rate
percentage of people whose income falls below the poverty line
core inflation rate
the rate of inflation excluding the effects of food and energy prices
globalization
the shift from local to global markets as countries seek foreign trade and investment
cyclical unemployment
unemployment that rises during economic downturns and falls when the economy improves
underemployed
working at a job for which one is overqualified, or working part-time when full-time work is desired
unemployment rate
the percentage of the labor force that is unemployed
inflation rate
the percentage rate of change in price level over time
discouraged worker
someone who wants a job but has given up looking
purchasing power
the ability to purchase goods and services
full employment
the level of employment reached when there is no cyclical unemployment
