Unit 5 - Chapter 13 Economic Review

Describe frictional, seasonal, structural, and cyclical unemployment.

Frictional: This is a type of unemployment from a change in life. this usually occurs when you are looking for a change in your current unemployment status. You are still looking for work though. Seasonal: this is when your job shifts or takes a break from normal production based on the season. This includes farmers who can't harvest through the harsh winter or lifeguards. Structural: This is a type of unemployment due to a change in demand or skill. You either aren't qualified to meet the standards of new innovative jobs or new technology comes out that is able to do your job in less the time. Cyclical: This is a bad type of unemployment is caused from a recession or depression in the US.

Describe how full employment is measured.

Full employment is measured by the opposite of the unemployment rate. Therefore if the unemployment rate was 4% then the full employment rate would be 96%.

Why isn't full employment the same as zero unemployment?

Full employment is the same as zero employment because full employment is reached when there is no cyclical unemployment in the US. Zero unemployment is the idea where everyone is working and not one person doesn't have a job. this isn't good because then there wouldn't be anything changing and it would completely eliminate supply and demand in the job market.

Explain why full employment does not mean that every worker is employed.

Full employment rate doesn't mean every worker is employed because full employment means that there is just no cyclical unemployment. This means that there is no job loss due to the recession or depression. This doesn't include the types of unemployment still around like frictional and seasonal.

Describe the 5 causes of poverty.

Lack of education, location, racial and gender discrimination, economic shifts, and shifts in family structure (Divorce).

Understand the use of price indexes to compare changes in prices over time.

Price index is how economist calculate the price change over time. They find the average price of a group of goods and services and then compare. They categorize the services in eight categories.

Explain the effects of rising prices.

Rising prices is brought about by inflammation. The economy is always growing and creating more the prices rise but when inflammation goes up the normal price of basic goods and services also increase. This also causing the purchasing power to go down. $10,000 in 1980 would not buy you the same amount of products as it would in 2017.

Suppose that the CPI for last year was 164 and for this year it is 168. Calculate the inflation rate from last year to this year.

Take this year and subtract it by last year, 168-164=4 and divide that by this year, 168/4= 0.0238 and multiply that by 100 and get the inflation rate= 2.38%

Define who is poor, according to government standards.

The government describes a poor person who is earning less the amount calculated to provide basic needs for this family. This change based on the amount of people in the blood related family and benefits received.

Describe recent trends in the inflation rate.

The recent trend in inflation have mostly been positive and many thing it has experienced deflation over these last couple of years. Inflation rates have been low and even companies have raised wages to compete with low employment rate and inflation was low at this period of time causing deflation.

Summarize government policies intended to combat poverty.

They created policies to combat the amount of poverty by creating organizations like cash assistance, education, medical benefits, food stamps, and subsidized housing. They also have helped poor areas with places like enterprise zones and employment assistance by providing job training classes.

Why is zero unemployment unachievable in a market economy?

Zero unemployment is unachievable in a market economy because there is always new job openings and if there was no unemployment everyone would be occupied and people starting a new business who would need workers wouldn't be able to find any because they would already all have jobs.

Analyze the distribution of income in the U.S.

ASK G

What is the difference between relative and absolute poverty? How is it determined? Is Capitalism Good for the Poor? Why? Possible essay question.

Absolute poverty is more based off of third world countries and the lack of basic needs such as water, diseases, clothing, and shelter. this type of poverty sets a condition and doesn't change over time. Relative is more based off of income and the society you live in rather than the whole world. It is based more off of a poverty line and income inequality. It is determined by the world bank. They look at many different factors and the first is by the well-being and quality of life. This includes what we earn, how much we eat, doctor visits and education. A country will be surveyed and then placed on a scale from left to right showing poverty to wealthy. They calculate the poverty line and find the place where the amount being earned does or does not earn them enough money to provide the basic needs and goods/services. The process of measuring poverty is always the same but the poverty line and extreme poverty line always differ based on the country. They plot the whole country and find how much of a country is in poverty. They find the percentage who is living below the poverty line to see where help is needed the most and what things can be done to help.

Identify the causes and effects of inflation.

quantity theory: This a theory that states if there is too much money in the economic system, it will cause a large amount of inflation. That is why it must be so closely monitored. demand-pull theory: This is a theory that supports inflation increases when the amount of demand for goods and services exceeds the amount of existing supply. cost-push theory: This is the theory that inflation occurs when producers raise the prices to meet the increasing cost to produce these goods and services. purchasing power: This is the idea and theory that a dollar today would buy you way less than a dollar would back in the 20's. The amount of purchasing power for money goes down as inflammation increases. income: wages can raise to match the amount of inflation. If you are a doctor or lawyer and are more salary based then they would have to match inflammation by raising prices. interest rates: If your bank account has an interest rate of 7% and inflammation is 5% then you are only actually earning 2% interest to meet the amount of inflammation. If your interest rate is only about 2% and the interest rate is still 5% you would be losing your money by actually saving it.