Eco CH 17

deflation

A decline in overall prices throughout the economy. This is the opposite of inflation.

inflation

A general rise in prices throughout the economy. It is a measure of changes in the cost of living.

disinflation

A reduction in the rate of inflation. An economy experiencing ________ still faces inflation, but at a declining rate.

Hyperinflation

An extremely high rate of inflation; above 100% per year.

Which of the statements is the best description of inflation? An increase in the overall price level has occurred. The price of all goods and services have increased proportionately. Real GDP is rising. The price of all goods and services in the economy are increasing. The prices of only consumer goods are increasing.

An increase in the overall price level has occurred.

GDP deflator

An index of the average prices for all goods and services in the economy, including consumer goods, investment goods, government goods and services, and exports. It is the broadest measure of inflation in the national income and product accounts (NIPA).

consumer price index (CPI)

An index of the average prices paid by urban consumers for a typical market basket of consumer goods and services.

producer price index (PPI)

An index of the average prices received by domestic producers for their output.

Which of these criteria is NOT required for a person to be considered unemployed?

An individual should browse online employment openings.

Consumer Price Index formula

CPI = (Cost in Current Period / Cost in Base Period) x 100

price level

The absolute level of a price index, whether the consumer price index (CPI; retail prices), the producer price index (PPI; wholesale prices), or the GDP deflator (average price of all items in GDP).

WHat causes inflation?

The government printing too much money

Why is the inflation rate positive when the prices of some goods fall?

The inflation rate is calculated based on a typical basket of goods and services.

natural rate of unemployment

The level of unemployment at which price and wage decisions are consistent; a level at which the actual inflation rate is equal to people's inflationary expectations and where cyclical unemployment is zero.

labor force participation rate

The percentage of the adult noninstitutionalized population that is in the labor force.

Which is true if a nation is currently experiencing full employment?

The rate of cyclical unemployment is 0%

labor force

The total number of those employed and unemployed. The unemployment rate is the number of unemployed divided by the labor force, expressed as a percent.

structural unemployment.

Unemployment caused by changes in the structure of consumer demands or technology. It means that demand for some products declines and the skills of this industry's workers often become obsolete as well. This results in an extended bout of unemployment while new skills are developed.

Frictional unemployment

Unemployment resulting from workers who voluntarily quit their jobs to search for better positions or are moving to new jobs but may still take several days or weeks before they can report to their new employers.

Cyclical unemployment

Unemployment that results from changes in the business cycle and where public policymakers can have their greatest impact by keeping the economy on a steady, low-inflationary, solid growth path.

underemployed workers

Workers who are forced to take jobs that do not fully utilize their education, background, or skills. ______________ workers often hold part-time jobs. Individuals who are involuntarily working part‑time are considered

marginally attached workers

Workers who were available for work and actively looked for it during the last 12 months but not in the last four weeks.

discouraged workers

_____ are the portion of marginally attached workers who have given up actively looking for work and, as a result, are not counted as unemployed.

When the economy experiences unanticipated inflation, all of the following groups "lose" EXCEPT:

debtors

A jobless recovery means that

gross domestic product (GDP) increases while there is no increase in employment.

Typical losses to our society and the economy when people are unemployed include each of the following except

high inflation.

How frequently is the survey that determines unemployment released?

monthly

WHat is most directly related to cyclical unemployment?

recessions

Who reports the official U.S. unemployment rate?

the U.S. Bureau of Labor Statistics

If an economy experiences deflation, then

the aggregate price level is declining.

What is the Misery Index?

the unemployment rate plus the inflation rate

By excluding the groups identified in the previous questions, the U.S. Bureau of Labor Statistics calculation methods

understate the true level of unemployment.