CSC Chapter 4: Overview of Economics

Phillips curve theory

A graph showing the relationship between inflation and unemployment. When unemployment is low, inflation tends to be high; when unemployment is high, inflation tends to be low.

coincident indicators

Statistical data that, on average, change at approximately the same time and in the same direction as the economy as a whole.

Consumer Price Index (CPI)

Price index which measures the cost of living by measuring the prices of a given basket of goods. Often used as an indicator of inflation.

microeconomics

The branch of economics that analyzes the market behaviour of individual consumers and firms, how prices are determined, and how prices determine the production, distribution, and use of goods and services.

participation rate

The share of the working-age population (15 and older) that is in the labour market, either working or looking for work.

equilibrium price

The price at which the quantity demanded equals the quantity supplied.

deflation

A sustained fall in prices where the consumer price index (CPI) is negative.

seasonal unemployment

Unemployment that results from a company or industry that only operates during specific seasons of the year.

Gross Domestic Product (GDP)

The value of all goods and services produced in a country in a year.

final good

A finished product; one that is purchased by the ultimate end user.

balance of payments

The detailed statement of a country’s economic transactions with the rest of the world over a given period.

macroeconomics

The branch of economics that focuses on the performance of the economy as a whole, looking at the broader picture and to the challenges facing society as a result of scarcity and choice.

natural unemployment rate

Also called the full employment unemployment rate. At this level of unemployment, the economy is thought to be operating at close to its full potential or capacity.

frictional unemployment

Unemployment that results from normal labour turnover, from people entering and leaving the workforce, and from the ongoing creation and destruction of jobs.

labour force

The sum of the population aged 15 years and over who are either employed or unemployed.

discouraged workers

Unemployed individuals that cannot find jobs and have not made specific efforts to find a job within the previous month.

disinflation

A decline in the rate at which prices rise – i.e., a decrease in the rate of inflation. Prices are still rising, but at a slower rate.

structural unemployment

Unemployment that results when workers are unable to find work or fill available jobs because they lack the necessary skills, do not live where the jobs are available, or decide not to work at the wage rate offered by the market.