Econ test 4

What are the causes of poverty

Lack of education

location: those living in inner cities and rural areas find fewer employment opportunities and are often forced to commute longe distances

Racial and gender discrimination

shifts in family structure: divorce, sing parent has a harder time

economic shifts: uneducated people are usually the “last ones hired and the first one fired”

Causes income distribution to differ

different demographics

income demographics

race/ethnic origin, type of family, residence, age

types of inflation

Creeping inflation

chronic inflation

hyperinflation

Creeping inflation

ideal rate of inflation, slow moving (1-2% a year)

chronic inflation

steady increasing prices from year to year (around 10% per year)

hyperinflation

rapid accelertaion rates of inflation, (50% per month)

How i price index measured

measuring the prices of standard group of consumer goods (market basket)

GDP

gross Domestic Product

How to calculate GDP

add all the total value of final goods and servies provided within a nations borders in one year.

underemployed workers

people who work at a job that they are overqualified for, or work part time when desiring full time

final goods

goods sold directly to costumers

intermediate goods

goods used in production of final goods

4 types of unemployment

1. Fractional

2. seasonal

3. structural

4. cyclical

Fractional

an individual has needed skills, a job is avaliable, they just haven’t found it yet

structural

an individual had skills not needed in the job market

ex new tech

cyclical

an individual has needed skills but thter are no jobs available

ex covid great depression

main causes and effects of inflation

1. quantity theory

2. demand-pull theory

3. cost push theory

1. quantity theory

too much money in the economy and there are too few goods

demand-pull theory

demand for goods is greater than the supply which increases prices

cost push theory

producers increase prices to meet increasing output

poverty threshhold

is the income level below which income cannot support a family or household

poverty rate

the % of people who live in households with incomes below the poverty threshold