Chapter 4 Economics KT

Question 1

A graph showing the relationship between inflation and unemployment.

Answer 1

Phillips curve

Question 2

Statistical data that, on average, change at approximately the same time and in the same direction as the economy as a whole.

Answer 2

coincident indicators

Question 3

Price index which measures the cost of living by measuring the prices of a given basket of goods. Often used as an indicator of inflation.

Answer 3

Consumer Price Index (CPI)

Question 4

The branch of economics that analyzes the market behaviour of individual consumers and firms, how prices are determined, and how prices determine the production, distribution, and use of goods and services.

Answer 4

microeconomics

Question 5

The share of the working-age population (15 and older) that is in the labour market, either working or looking for work.

Answer 5

participation rate

Question 6

The price at which the quantity demanded equals the quantity supplied.

Answer 6

equilibrium price

Question 7

A sustained fall in prices where the consumer price index (CPI) is negative.

Answer 7

deflation

Question 8

Unemployment that results from a company or industry that only operates during specific seasons of the year.

Answer 8

seasonal unemployment

Question 9

The value of all goods and services produced in a country in a year.

Answer 9

Gross Domestic Product (GDP)

Question 10

A finished product; one that is purchased by the ultimate end user.

Answer 10

final good

Question 11

The detailed statement of a country’s economic transactions with the rest of the world over a given period.

Answer 11

balance of payments

Question 12

The branch of economics that focuses on the performance of the economy as a whole, looking at the broader picture and to the challenges facing society as a result of scarcity and choice.

Answer 12

macroeconomics

Question 13

Also called the full employment unemployment rate. At this level of unemployment, the economy is thought to be operating at close to its full potential or capacity.

Answer 13

natural unemployment rate

Question 14

Unemployment that results from normal labour turnover, from people entering and leaving the workforce, and from the ongoing creation and destruction of jobs.

Answer 14

frictional unemployment

Question 15

The sum of the population aged 15 years and over who are either employed or unemployed.

Answer 15

labour force

Question 16

Unemployed individuals that cannot find jobs and have not made specific efforts to find a job within the previous month.

Answer 16

discouraged workers

Question 17

A decline in the rate at which prices rise – i.e., a decrease in the rate of inflation. Prices are still rising, but at a slower rate.

Answer 17

disinflation

Question 18

Unemployment that results when workers are unable to find work or fill available jobs because they lack the necessary skills, do not live where the jobs are available, or decide not to work at the wage rate offered by the market.

Answer 18

structural unemployment