Econ Module 12-15

The word "real" in economics means

adjusted for inflation

Real income can be determined by:

adjusting nominal income for inflation

the civilian labor force includes

all civilians 16 years or older who are employed or actively seeking employment

What is the most widely used measure of inflation in the United States?

consumer price index

Hyperinflation is typically caused by

continuous expansion of the money supply to finance government budget deficits

unit-of-account costs

costs arising from the way inflation makes money a less reliable unit of measurement

The actual unemployment rate is

natural + cyclical

The natural rate of unemployment is

structural + frictional

The inflation or deflation rate is

the change in a price index divided by the initial value of the index

Shoe-leather costs

the increased costs of transactions caused by inflation

cyclical unemployment

unemployment caused by a general slowdown or decline in the level of economic activity in the economy

frictional unemployment

unemployment due to the time workers spend in job search

How do you calculate labor force participation rate?

(labor force/population age 16 and older) • 100

How do you calculate unemployment rate?

(unemployed/labor force) • 100

A certain amount of unemployment is normal, or unavoidable. It consists of

frictional and structural unemployment

The official unemployment rate understates the unemployment level in the economy because the official rate

ignores underemployment and discouraged workers

A person is unemployed if he or she is

in the labor force but unable to find work

How do you find the labor force?

employed + unemployed

demand-pull inflation

occurs when total spending exceeds the economy's ability to provide output at the existing price level.

Inflation means that

prices in the aggregate are rising, although some particular prices may be falling

unanticipated inflation

reduces the value of the debt owed by borrowers

structural unemployment

unemployment resulting from wage rates being higher than market rate, also technological unemployment

Discouraged workers are

workers who have given up looking for work