Chapter 13: Economic Challenges

Question 1

unemployment that occurs when people take time to find a job

Answer 1

frictional employment

Question 2

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

Answer 2

seasonal employment

Question 3

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

Answer 3

structural employment

Question 4

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

Answer 4

cyclical unemployment

Question 5

Four Types of Unemployment

Answer 5

frictional, seasonal, structural, cyclical

Question 6

Five major causes of structural unemployment

Answer 6

the development of new technology
the discovery of new resources
changes in consumer demand
globalization
lack of education

Question 7

composed of civilian’s 16 or older who have a job or are actively looking for a job

Answer 7

the labor force

Question 8

the level of employment reached when there is no cyclical unemployment

Answer 8

full employment

Question 9

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

Answer 9

underemployed

Question 10

works who want a job but have given up looking

Answer 10

discouraged workers

Question 11

a general increase in prices

Answer 11

inflation

Question 12

the ability to purchase goods and services

Answer 12

purchasing power

Question 13

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

Answer 13

price index

Question 14

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

Answer 14

Consumer Price Index

Question 15

the percentage rate of change in price level over time

Answer 15

inflation rate

Question 16

the rate of inflation excluding the effects of food and energy prices

Answer 16

core inflation rate

Question 17

inflation that is our of control

Answer 17

hyperinflation

Question 18

theory that too much money in the economy causes inflation

Answer 18

quantity theory

Question 19

theory that inflation occurs when demand for goods and services exceeds existing supplies

Answer 19

demand-pull theory

Question 20

theory that inflation occurs when producers raise prices in order to meet increased costs

Answer 20

cost-push theory

Question 21

the process by which rising wages cause higher prices, and higher prices cause higher wages

Answer 21

wage-price spiral

Question 22

Three Effects of Inflation

Answer 22

purchasing power
income
interest rates

Question 23

income that does not increase even when prices go up

Answer 23

fixed income

Question 24

a sustained drop in the price level

Answer 24

deflation

Question 25

the income level below which income is insufficient to support a family or household

Answer 25

poverty threshold

Question 26

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

Answer 26

poverty rate

Question 27

Four factors affecting the poverty rate

Answer 27

race and ethnic origin
type of family
age
residence

Question 28

Causes of Poverty (5)

Answer 28

lack of education
location
racial and gender discrimination
economic shifts
shifts in family structure

Question 29

how the nation’s total income is distributed among its population

Answer 29

income distribution

Question 30

government issued coupons that recipients exchange for food

Answer 30

food stamps

Question 31

the curve that illustrates income distribution

Answer 31

Lorenz curve

Question 32

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

Answer 32

enterprise zone

Question 33

federal funds given to the states in lump sums

Answer 33

block grant

Question 34

a program requiring work in exchange for temporary assisstance

Answer 34

workfare