Chapter 13

Question 1

Frictional unemployment

Answer 1

Unemployment that occurs when people take time to find a job

Question 2

Seasonal unemployment

Answer 2

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

Question 3

Structural unemployment

Answer 3

Unemployment that occurs when workers’ skills do not match the jobs that are available

Question 4

Cyclical unemployment

Answer 4

Unemployment that rises during economic downturns and falls when the economy improves

Question 5

Census

Answer 5

Official count of the population

Question 6

Unemployment rate

Answer 6

Percentage of the nation’s labor force that is unemployed

Question 7

Full employment

Answer 7

Level of employment reached when there is no cyclical unemployment

Question 8

Underemployed

Answer 8

Working at a job for which one is over qualified or working part time when full time work is desired

Question 9

Discouraged worker

Answer 9

Person who wants a job but has given up looking

Question 10

Inflation

Answer 10

General increase in prices

Question 11

Purchasing power

Answer 11

ability to purchase goods and services

Question 12

Price index

Answer 12

Measurement that shows how the average price of a standard group of goods changes over time

Question 13

Consumer price index (CPI)

Answer 13

Price index determined by measuring the price of a standard group of goods meant to represent the “market basket” of typical urban consumer

Question 14

Market basket

Answer 14

Representative collection of goods and services

Question 15

Inflation rate

Answer 15

Percentage rate of change in price level over time

Question 16

Core inflation rate

Answer 16

Rate of inflation excluding the effects of food and energy prices

Question 17

Hyperinflation

Answer 17

Out of control

Question 18

Quantity theory

Answer 18

Too much money in economy causes inflation

Question 19

Demand-pull theory

Answer 19

When demand for goods and services exceeds existing supplies

Question 20

Cost-push theory

Answer 20

Producers raise prices in order to meet increased costs

Question 21

Wage-price spiral

Answer 21

Rising wages cause higher prices and higher prices cause higher wages

Question 22

Fixed income

Answer 22

Does not increase even when prices go up

Question 23

Deflation

Answer 23

Sustained drop in the price level

Question 24

Poverty threshold

Answer 24

Income level below which income is insufficient to support a family

Question 25

Poverty rate

Answer 25

Percentage of people who live in households with income below official poverty line

Question 26

Income distribution

Answer 26

Nations total income is distributed among its population

Question 27

Food stamps

Answer 27

Gov issued coupons that recipients exchange for food

Question 28

Lorenz curve

Answer 28

Illustrates income distribution

Question 29

Enterprise zone

Answer 29

Area where companies can locate free of certain local state and federal taxes and restrictions

Question 30

Block grant

Answer 30

Federal funds given to states in lump sums

Question 31

Workfare

Answer 31

Program requiring work in exchange for temporary assistance