Chapters 6-10 Flashcards
price level
a weighted average of the prices of all goods and services
price index
a measure of the price level
Consumer Price Index (CPI)
the weighted average of prices of a specific set of goods and service purchased by a typical household; a widely cited index number for the price level
what 8 categories of goods and services does the market basket include?
(1) food and beverages, (2) housing, (3) apparel, (4) transportation, (5) medical care, (6) recreation, (7) education and communication, and (8) other goods and services
base year
the year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year
inflation
an increase in the price level; usually measured on an annual basis
real income
nominal income adjusted for price changes
nominal income
the current dollar amount of a person’s income
what two groups can the population of the US be divided into?
(1) persons under 16, persons in the armed forces or persons institutionalized and (2) the civilian noninstitutional population
what is the civilian noninstitutional population?
persons either in the civilian labor force or not in the labor force
what does it mean to be “not in the labor force”?
a person is neither working nor looking for work; i.e. retired people, people who engage in own-home housework or those who choose not to work
what does it mean to be in the labor force?
that you are either unemployed or employed
unemployment rate
the percentage of the civilian force that is unemployed; unemployment rate = number of unemployed persons/civilian labor force
employment rate
number of employed persons/ civilian noninstitutional population
labor force participation rate
civilian labor force/civilian noninstituional population
what are the four reasons for unemployment?
job loser, job leaver, reentratn, new entrant
what does it mean to be a discouraged worker? how does this figure skew the fix on the real unemployment problem in society?
a discouraged worker is a person who was fired from a job and isn’t actively looking for another job like an unemployed person might. discouraged workers are not counted in the unemployment rate.
frictional unemployment
unemployment due to natural frictions in the economy and that is caused by changing market conditions. represented by qualified individuals with transferable skills who change jobs.
structural unemployment
unemployment due to structural
