Economics: Market Equilibrium, Unemployment, and Inflation

Comprehensive vocabulary flashcards covering fundamental economic concepts, including supply and demand equilibrium, unemployment measurements, inflation dynamics, and monetary stabilization policies.

Equilibrium Price

The price where the amount buyers want equals the amount sellers offer.

Equilibrium Quantity

The amount bought and sold at the equilibrium price.

Shortage

A condition where buyers want more than sellers offer, which tends to push prices up.

Surplus

A condition where sellers offer more than buyers want, which tends to push prices down.

Market Price Adjustment

The movement of prices toward equilibrium, where quantity supplied equals quantity demanded, resolving shortages and surpluses.

Unemployment Rate Calculation

$$\text{Unemployed people actively seeking work} \div \text{labor force} \times 100$$

Unemployed

Someone without a job who is available and actively looking for work.

Labor Force

People who are employed plus people who are unemployed and actively seeking work.

Limitation of the Unemployment Rate

It may fail to count individuals who have stopped looking for work.

Natural Rate of Unemployment

The unemployment that remains even when the economy is doing normally, which includes people between jobs or whose skills do not match available jobs.

Inflation

A general rise in prices over time, which reduces the purchasing power of money.

Costs of Inflation

Money buys less, prices become harder to plan around, and people may spend time protecting their money's value.

Borrowers (in Unexpected Inflation)

Individuals or entities that may gain from unexpected inflation because they repay loans with money worth less than expected.

Lenders (in Unexpected Inflation)

Individuals or entities that may lose from unexpected inflation, along with people whose savings or incomes do not keep up with rising prices.

Deflation

A general fall in prices over time.

Costs of Deflation

Harmful economic effects where people may delay purchases, businesses may earn less, and debts become harder to repay.

Central Bank Inflation Stabilization

The adjustment of interest rates and other policies by central banks to keep inflation low and predictable.