Week 5- Business Cycle, Unemployment, and Inflation Flashcards
Capital goods and consumer durables affected the most by___
business cycle
2 problems arise from business cycle:
unemployment and inflation.
Unemployment rate=
unemployed/ (employed + unemployed) x 100.
Discouraged workers are those eligible for employment and able to work, but ___
currently unemployed and has not attempted to find employment in the last 4 weeks.
Frictional Unemployment are___
workers who either searching for jobs or waiting.
Structural Unemployment result of a ___
skill mismatch. Worker have to change job to work on something else.
Cyclical Unemployment caused by____
decline in total spending. Firms hired less and less workers during recession/depression.
The economy is “fully employed” when___
only frictional and structural unemployment occurs.
Natural rate of unemployment occurs when___
number of job seekers= number of job vacancies.
Demand-Pull Inflation happened when___
Excess demand to limited output.
Caused by an over issuance of money by central bank.
Cost-Push Inflation___
Rise in prices due to rising production cost.
Nominal income are dollars received as____
wages, rent, interest, and profits.
Real income measures___
nominal and adjust it for inflation.
real income= normal income/ price index.
Fixed income receiver are people___
whose income are fixed see their income falls when inflation occurs.
Who hurts by inflation???
Fixed income receiver- people whose income are fixed see their income falls when inflation happen.
Savers- prices rises, saving decreases.
Creditors- lenders.
Debtors- borrowers.
