econ quiz 10-12

unemployment

unemployment

the number of unemployed people, defined as all people above a particular age who are not working and are actively looking for a job

unemployment rate

The measure of the amount of unemployment in an economy, expressed as a percentage, calculated by taking the total number of unemployed people in an economy and dividing by the labor force, and multiplying by 100

structural unemployment

a type of unemployment that occurs as a result of technological changes and changing patterns of demand (causing changes in demand for labour skills) as well as changes in the geographical location of jobs, and labor market rigidities (lack of labor market flexibilities)

frictional unemployment

a type of unemployment that occurs when workers are between jobs; workers may leave their job because they have been fired, or because their employer went out of business, or because they are in search of a better job, or they may be waiting to begin a new job; tends to be short term

seasonal unemployment

a type of unemployment that occurs when the demand for labor in certain industries changes on a seasonal basis because of variations in needs; for example, farm workers are hired during peak harvesting seasons and let off for the rest of the year

Demand-deficient unemployment

Unemployment arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment

Inflation

a continuing (or sustained) increase in the general price level

Deflation

a continuing (or sustained) decrease in the general price level

Disinflation

Refers to a fall in the rate of inflation; it involves a positive rate of inflation and should be contrasted deflation

Consumer Price Index (CPI)

a measure of the cost of living for the typical household; it compares the value of a basket of goods and services in one year with the value of the same basket in a base year. Inflation (and deflation) are measured as a percentage change in the value of the basket from one year to another

weighted price index

a measure of average prices in one period relative to average prices in a reference period called a base period
goods and services are weighed according to their relative importance

demand-pull inflation

A type of inflation caused by an increase in AGGREGATE DEMAND. shown in the ad-as model as a rightward shift in the ad curve

cost-push inflation

A type of inflation caused by a fall in AGGREGATE SUPPLY, resulting from an increase in COSTS OF PRODUCTION. shown in the AD-AS model as a leftward shift of the AS curve

Deferred Consumption

occurs when consumers postpone spending, such as if they expect the price level to fall

Phillips Curve

a curve showing the relationship between unemployment and inflation. the short run Phillips curve shows a negative relationship between the rate of inflation and the unemployment rate. the long run Phillips curve is vertical at the natural rate of unemployment, indicating that there is no negative relationship between inflation and unemployment

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves

Short term growth

Growth of an economy (growth in real output) over relatively short periods of time; shown by (i) a movement of a point inside the production possibilities curve (PPC) to a point closer to the PPC (see actual growth), or (ii) by upturns in the business cycle usually due to increases in aggregate demand.

Long-term growth

Growth of an economy (growth in real output) over long periods of time; shown by rightward shifts of the long-run aggregate supply (LRAS) curve corresponding to the long-term growth trend of the business cycle; or outward shifts of the production possibilities curve (PPC).

government debt

Refers to the government's accumulation of budget deficits minus budget surpluses; is the total amount owed by the government to all creditors (lenders); also known as national debt.

budget deficit

referring usually to the government's budget, it is the situation where government tax revenues are less than government expenditures over a specific period of time (usually a year)

budget surplus

referring usually to the government's budget, it is the situation where government tax revenues are greater than government expenditures over a specific period of time (usually a year)

Sustainable debt

A level of debt where the borrowing government has enough revenues to meet its debt obligations without overdue debt payments, while also allowing economic growth at an acceptable rate

debt servicing

The payments that must be made in order to repay the principal (the amount of a loan) plus interest.

economic inequality

the degree to which people in a population differ in their ability to satisfy their economic needs; economists focus on inequalities that result mainly from differences in income and wealth

Quintile

Division of population into five equal groups with respect to the distribution of a variable, such as income; for example, the lowest income quintile refers to 20% of the population with the lowest income

Lorenz Curve

A curve illustrating the degree of equality of income distribution in an economy. It plots the cumulative percentage of income received by cumulative shares of the population. the closer the Lorenz curve is to the diagonal line of perfect equality, the more equal the income distribution

Gini Coefficient (Gini Index)

a summary measure of the information contained in the Lorenz curve of an economy, defined as the area between the diagonal and the Lorenz curve, divided by the entire area under the diagonal. the gini coefficient has a value between 0 and 1; the larger the gini coefficient, and the closer it is the greater is the income inequality

poverty

The inability of an individual or family to afford an adequate standard of goods and services. It may be relative or absolute.

absolute poverty

The inability of an individual or a family to afford a basic standard of goods and services, where the standard is absolute and unchanging over time. Absolute poverty is defined in relation to a nationally or internationally determined 'poverty line', which determines the minimum income that can sustain a family in terms of its basic needs.

poverty line

an income level that is just enough to to ensure a family with the minimum necessary food, housing, clothing, medical needs

relative poverty

The inability of an individual or family to afford an adequate standard of goods and services, where the adequate standard is relative and changes over time; this standard is defined as what is 'typical' in a society, taken to be a particular percentage (often 50%) of society's median income. As income increase and the median income rises, the standard also rises.

Minimum income standards

A method to measure poverty consisting 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; is used to create a basket of goods needed to achieve this minimum.

multidimensional poverty index

a composite indicator that measures poverty in three dimensions: health, education and living standards, each of which reflects deprivations (essential things people don't have)

opportunity

a set of circumstances that makes it possible to do something

Globalisation

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

direct taxes

Taxes paid directly to the government tax authorities by the taxpayer, including personal income taxes, corporate income taxes, and wealth taxes.

personal income taxes

taxes paid by households or individuals in households on all forms of income, including wages, rental income, interest income, and dividends (income from ownership of shares in a company)

corporate income taxes

Tax on the profits of corporations, which are businesses (firms) that have formed a legal body called a 'corporation' that is legally separate from its owners.

wealth taxes

Taxes on ownership of wealth, most commonly property taxes, based on the value of property owned, and inheritance taxes, based on the value of property inherited.

indirect taxes

taxes levied on spending to buy goods and services, called indirect because, whereas payment of some or all of the tax by the consumer is involved, they are paid to the government authorities by the suppliers (firms), that is, indirectly

Proportional taxation

Taxation where as income increases, the fraction of income paid as taxes remain constant; there is a constant average tax rate

progressive taxation

taxation where, as income increases, the fraction of income paid as taxes increases; there is an increasing average tax rate

regressive taxation

Taxation where as income increases, the fraction of income paid as taxes decreases; there is a decreasing average tax rate

marginal tax rate

The tax rate paid on additional income; refers to the tax rate that applies to the highest tax bracket of an individual's personal income.

average tax rate

tax paid divided by total income, expressed as a percentage (tax paid divided by a total income multiplied by 100)

transfer payments

Payments made by the government to individuals specifically for the purpose of redistributing income, thus transferring income from those who work and pay taxes towards those who cannot work and need assistance. groups receiving transfer payments may include older people, sick people, very poor people, children of poor families, unemployed people and others; referred to as vulnerable groups

Universal Basic Income

A method intended to provide everyone in a country with a sum of money that they would receive regardless of any other income they may have; its purpose is to reduce income inequalities and poverty.