IB Economics ch 10-12 vocab

Unemployment

Refers to people of working age who are actively looking for a job but who are not employed.

Structural Unemployment

Occurs as a result of changes in demand for particular types of labor skills, changes in the geographical location of industries and therefore jobs, and labor market rigidities.

Frictional Unemployment

Occurs when workers are between jobs.

Seasonal Unemployment

Occurs when the demand for labor in certain industries changes on a seasonal basis because of variation of needs.

Cyclical Unemployment

Occurs during the downturns of the business cycle when the economy is in a deflationary/recessionary gap.

Demand-Deficient Unemployment

The downturn seen as arising from declining or low aggregate demand.

Inflation

Sustained increase in the general price level.

Deflation

Sustained decrease in the general price level.

Consumer Price Index (CPI)

A measure of the cost of living for the typical household and compares the value of a basket of goods and services in one year with the value of he same basket in a base year.

Disinflation

When inflation occurs at a lower rate.

Weighted Price Index

Weighs various goods and services according to their relative importance in consumer spending.

Demand-Pull Inflation

Involves an excess of aggregate demand over aggregate supply at the full employment level of output, caused by an increase in AD.

Cost-Push Inflation

Caused by a fall in aggregate supply (from increases in wage or prices of other inputs)

Deferred consumption

Means that consumers postpone spending (when they see falling prices as they expect that prices will continue to fall).

Philips Curve

Shows the relationship between unemployment and inflation.

Short-run Philips curve

Shows that there is a negative relationship between the rate of inflation and unemployment.

Long-run Philips Curve

Is vertical at NRE indicating that unemployment is independent of rate of inflation.

Short-term Growth

Takes place over relatively short periods of time.

Long term growth

Needs a long time to take effect.

Budget Deficit

If expenditures are larger than tax revenues.

Budget surplus

If tax revenues are greater than expenditures.

Government or national or public debt

Refers to the amount of money the government owes to lenders outside the government itself.

Debt Servicing

Refers to the payments that must be made to repay the principle plus interest payments.

Economic Inequality

Refers to the degree that people in a population differ in their ability to satisfy their economic needs.

Quintile

20% portion of a countries population.

Gini coefficient or index

Named after Corrado Gini, a summary measure of the information contained in the Lorenz curve of an economy.

Poverty

Refers to the inability to satisfy minimum consumption needs.

Absolute poverty

Refers to a situation where a person or family does not have enough income to meet basic human needs.

Poverty Line

An income level that is considered minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs, and so on.

Relative Poverty

A concept that compares the income of individuals or households in a society with median incomes.

Minimum Income Standards (MIS)

Refers to a method to measure poverty. Consists of ongoing research on what people in a population believe are the essentials for a minimum acceptable standard of living that allows people to participate in society.

Multidimensional Poverty Index (MPI)

Measures poverty in three dimensions: health, education, and living standards.

Opportunity

A set of circumstances that makes it possible for someone to do something.

Globalization

Refers to economic integration on a global scale, involving increasing interconnectedness throughout the world in many areas (trade, investment, people, technology, ideas, knowledge, communications, and culture)

Direct taxes

Taxes paid directly to the government tax authorities by the taxpayer.

Personal Income Taxes

Involves taxes paid by households or individuals in households. Paid on all forms of income and are the most important source of government tax revenues.

Corporate income taxes

Taxes on the profit of corporations.

Wealth Taxes

Taxes on ownership of assets.

Indirect taxes

Taxes on spending on goods and services.

Proportional Taxation

As income increases, the fraction of income paid as taxes remains constant; there is a constant tax rate.

Progressive taxation

As income increases, the fraction of income paid as taxes increases; there is an increasing tax rate.

Regressive Taxation:

As income increases, the fraction of income paid as taxes decreases; there is a decreasing tax rate. MA

Marginal Tax Rate

Tax rate paid on additional income.

Average tax rate

Tax paid divided by total income.

Transfer Payments

Payments made by the government to individuals specifically for the purpose of redistributing income away from certain groups and towards other groups.

Universal Basic Income

A method intended to provide residents in a country with a sum of money that they would receive regardless of any other income they may have.