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Chapter 13 notes
Unemployment
 A nation’s unemployment rate is an important indicator of the health of the economy.
 The ________________________ polls a sample of the population to determine how many people
are employed and unemployed.
 The ___________________ is the percentage of the nation’s labor force that is unemployed.
 The unemployment rate is only a ________________. It does not reflect regional economic trends.
 The labor force is composed of civilians age _________________ who ________________________________
________________ for a job.

Some types have ________________ consequences for the economy and the workers than others.
Types of Unemployment
Frictional Unemployment
 Occurs when:
Structural Unemployment
 Occurs when:
Seasonal Unemployment
 Occurs when:

Cyclical Unemployment:
Full Employment
Economists generally agree that in an economy that is working properly, an unemployment rate
of around __________________________________.
 Sometimes people are _____________________, that is working a job for which they are overqualified, or working part-time when they desire full-time work.
 ________________________ are people who want a job, but have given up looking for one.
Full employment is the level of employment reached when there is no __________
__________________

Inflation
 Aggregate Supply & Aggregate Demand
 Aggregate means total
 Aggregate Supply- total goods and services produced throughout the economy.
 Aggregate Demand- total amount of spending throughout the economy.
The Effects of Rising Prices



Inflation is _________________________________.
Purchasing power, the ability to purchase goods and services, is _________________________.
Price level is the ________________________________________________ at a given point in time
Price Indexes
A price index is a measurement that shows how the average price of a standard group of
goods changes over time.
 The consumer price index (CPI) is computed each month by the ___________________________.
 CPI is determined by measuring the price of a _________________ meant to represent the typical
“__________________” of an urban consumer.
 Changes in the CPI from month to month help economists measure the economy’s _____________.
 The inflation rate is the ________________________________________.
leads to inflation.
Types of inflation




Inflation means that ________________________ exceeds ______________________________
Inflation- When ______________________ increases faster than ______________________. An
increase in overall prices.
This can happen because of the following reasons: ________________________________________
_________________________________________________________.
Deflation- when ______________________ decreases more rapidly than _____________________. So
sellers are forced to _________________ prices to attract buyers.
Hyperinflation: Inflation that is _________________________.
Causes of Inflation
 Demand-Pull Theory –
______________________________________________________________________________________
______________________________________________________________________________________
 Cost-Push Theory –
______________________________________________________________________________________
______________________________________________________________________________________
Effects of Inflation
A.
B.
C.
D.
E.
What group is MOST affected by inflation? _________________________________________
GDP - _________________________________________________________________________________
GDP per capita - _________________________________________________________________________
GDP growth rate - ________________________________________________________________________
CPI - ___________________________________________________________________________________
Shoe-leather cost - __________________________________________________________________________
Menu cost - ________________________________________________________________________________
Wage-Price spiral - ___________________________________________________________________________
Poverty
 ____________________: This is a measure of the level of income necessary to subsist in a society.
Dependent on the cost of living and peoples' expectations. Usually defined by governments and
calculated as that level of income at which a __________________________________ of its income to
basic necessities such as food, water, shelter, and clothing
Causes of Poverty:
A. _________________________________________________________________________
B. _________________________________________________________________________
C. _________________________________________________________________________
D. __________________________________________________________________________
Lorenz Curve illustrates ______________________________________________________________