Chapter 7 Inflation And Unemployment Flashcards
Inflation
-a sustained increase in the general price level.
It means that prices of goods and services are rising and staying at their higher levels, though not all rise nor do they all rise at the same time.
CPI
-consumer price index- measures changes in prices paid by consumers.
(Basket today/ Base basket) x 100
PPI
-producer price index - measures changes in prices of the raw materials bought by businesses.
Index
-index number is a value which compares a base year to all other years.
Base
-
Market basket
-here purchases by households are monitored.
Unemployment
-A situation where individuals, over the age of 15 are actively seeking work, but are unable to obtain a job and as a result, labour resources are not utilised.
Labor force
-anyone who is employed or is actively seeking employment is part of the labor force.
Underemployed
-Underemployment includes those workers that are highly skilled but working in low paying jobs, workers that are highly skilled but work in low skilled jobs and part time workers that would prefer to be full - time.
Discouraged worker
-they cannot find work and have given up yet we cease to count them and drop them from the labor force.
Seasonal unemployment
-some workers have jobs that are active only part of the year.
Structural unemployment
-some workers lack necessary skills, such as the ability to read and write, or live in areas where jobs are scarce. These workers are unable to find jobs, even in the best of times.
Frictional unemployment
-when workers voluntarily quit a job to find another, they are briefly unemployed.
Cyclical unemployment
-as the economy moves into a recession, some workers lose their jobs due to a lack of demand for goods and services. This unemployment caused by the business cycle normally goes away when recession ends.
Participation rate
-The percentage of the working age population who are members of the labor force
Labor force participation rate = Labor force/working-age population x 100
