Inflation & Unemployment Vocabulary - Kirk's classes

Inflation

A general increase in prices. Inflation is usually measured with a price index.

Discouraged Worker

A person who wants a job but has given up looking for work. The government no longer counts this person as unemployed because they are no longer actively looking for work.

Consumer Price Index (CPI)

A price index determined by measuring the price of a standard group of goods and services meant to represent a typical "market basket" of a typical urban consumer.

Deflation

A sustained drop in the price level.

Demand-Pull Inflation

A theory that inflation occurs when demand for goods and services exceeds existing supplies. "Too many dollars chasing too few goods."

Poverty threshold

An income level below which income is insufficient to support families or households.

Census

An official count of the population. A census is taken every 10 years.

Fixed income

Income that does not increase even when prices go up.

Hyperinflation

Inflation that is out of control; very high inflation

Purchasing Power

The ability to purchase goods and services. Inflation erodes/decreases the purchasing power of someone's income.

Full Employment

The level of employment reached when there is no cyclical unemployment. When you have full employment, the unemployment rate is between 4-6% because there is still Friction and Structural Unemployment.

Poverty rate

The percentage of people who live in households with income below the official poverty line.

Unemployment Rate

The percentage of the nation's labor force that is unemployed.

Wage-price spiral

The process by which rising wages cause higher prices and higher prices cause higher wages.

Cost-push Inflation

Theory that inflation occurs when producers raise prices to meet increased production costs.

Quantity Theory

Theory that too much money in the economy causes inflation. A theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate

Seasonal Unemployment

Unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season.

Frictional Unemployment

Unemployment that occurs when people take time to find a job. Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.

Structural Unemployment

Unemployment that occurs when worker's skills do not match the jobs that are available. Ex. include jobs lost to cheaper foreign labor, technological change so that a machine now performs the job.

Cyclical Unemployment

Unemployment that rises during economic downturns (recessions) and falls when the economy improves. Related to the Business Cycles.

Underemployed

Working at a job for which one is overqualified, or working part-time when full-time work is desired.