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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 ______________________________________________________________