Macroeconomic Objectives and Economic Inequality

Flashcards for key concepts related to macroeconomic objectives, unemployment, inflation, and economic inequality.

Macroeconomic Objectives

Goals for the economy including steady growth, full employment, low inflation, and economic equity.

Full Employment

The maximum number of people working with the economy producing at capacity.

Unemployment Rate

The percentage of the labor force that is unemployed.

Labor Force

The number of people in a country who are working or are looking for work.

Labor Force Participation Rate (LFPR)

The proportion of the population over age 16 that is in the labor force.

Natural Unemployment

A normal level of unemployment that occurs due to frictional, structural, and seasonal factors.

Cyclical Unemployment

Unemployment caused by a drop in aggregate demand during economic contractions.

Cost-Push Inflation

Inflation caused by rising costs of production.

Demand-Pull Inflation

Inflation that occurs when aggregate demand exceeds full employment output.

Equity

Economic fairness, assessed by income or wealth distribution.

Gini Coefficient

A measure of income inequality where 0 represents perfect equality and 1 represents maximum inequality.

Deflation

A decrease in the average price level over time.

Progressive Tax

A tax system where the tax rate increases as the taxable amount increases.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases.

Transfer Payments

Payments made by the government to individuals without an exchange for goods or services.

Public Goods

Goods that are under-produced by the market, like public healthcare and education.