exam 1

Question 1

employed

Answer 1

full time, part time, temporary, has a job but on temporary leave, an unpaid family worker that works at least 15 hours a week

Question 2

unemployed

Answer 2

people who are not working but seeking employment

Question 3

out of labor force

Answer 3

retired, in school full time, incarcerated, under 16, armed forces

Question 4

unemployment rate

Answer 4

unemployed population/labor force =
% of labor force unemployed

Question 5

labor participation rate

Answer 5

labor force/ non-institutionalized civilians over 16

Question 6

natural state of unemployment

Answer 6

unemployment between economic boom and recession

Question 7

frictional unemployment

Answer 7

short-term, often voluntary unemployment between jobs

Question 8

cyclical unemployment

Answer 8

the difference between current unemployment rate and full employment, caused by recession

Question 9

structural unemployment

Answer 9

caused by changes in consumer demand, obsolesence,

Question 10

real GDP

Answer 10

Gross Domestic Products, total value of final goods and services produced by a country in a year, measured using prices in the previous year, compounds

Question 11

real GDP per capita

Answer 11

real GDP/population
rough estimate of standard of living

Question 12

What counties have the highest GDP?

Answer 12

India, China, the EU, Great Britain, and the US produce 3/4 of the words GDP

Question 13

compounding

Answer 13

small increases in GDP compound into bigger gains

Question 14

business cycle

Answer 14

increases and decreases in economic activity; peak, recession, trough, recovery

Question 15

income equation of GDP

Answer 15

labor of wages + corporate profits + proprietor income+ rental income + net interest + depreciation

Question 16

expenditure equation of GDP

Answer 16

C + I + G+(X-M)
C:personal consumption
I: Gross private domestic investment
G: government spending
X-M: Net exports

Question 17

Lorenz curve

Answer 17

visual indicator of inequality
y axis: cummulative % of income
x axis: cummulative % of population
Further the Lorenz curve is from the line of perfect equality, the more unequal a country is

Question 18

gini coefficent

Answer 18

A(space to the right of line of perfect equality) / A + B
(total area under line of perfect equality)

Question 19

absolute poverty

Answer 19

universal, 1-2 dollar a day income, basic needs not met

Question 20

relative poverty

Answer 20

percentage level of median income, survival not threatened, social exclusion

Question 21

discouraged workers

Answer 21

unemployed workers who have given up looking for work

Question 22

benefits of economic inequality

Answer 22

• wealthy invest in new products that benefit all
• people can pursue their passions and are rewarded for their efforts