Employment and Inflation Economics

A set of flashcards covering key concepts related to employment and inflation economics.

Full Employment

The highest amount of skilled and unskilled labor that could be employed within an economy at any given time.

Unemployment

People who are out of work, want a job, and have actively sought work.

Cyclical Unemployment

Unemployment that occurs during a recession when many jobs are lost.

Frictional Unemployment

Unemployment that occurs due to the normal turnover in the labor market.

Structural Unemployment

Unemployment resulting from an absence of demand for a certain type of worker.

Underemployment

A situation where a worker is employed in a job that is insufficient in some important way, such as part-time work when they desire full-time.

Keynesian Approach

An economic theory that suggests government intervention, through spending and fiscal policies, can stimulate demand and create jobs.

Monetarist Approach

An economic theory that emphasizes controlling the money supply to manage inflation and unemployment.

Active Workforce

The total number of employed and unemployed individuals within an economy.

Phillips Curve

Shows the inverse relationship between unemployment and inflation, indicating that higher demand can reduce unemployment but can lead to inflation.

Demand-pull Inflation

Inflation that occurs when demand for goods and services exceeds supply.

Cost-push Inflation

Inflation that results from an increase in the costs of production which forces businesses to raise prices.

Purchasing Power

The amount of goods and services that can be purchased with a unit of currency.

Quantity Theory of Money (QTM)

The theory that relates the money supply to the price levels and the volume of transactions in the economy.

Stagflation

A situation in which inflation and unemployment rise simultaneously, contradicting the Phillips Curve.

Central Bank

An institution that manages a country's monetary policy and regulates financial institutions.

Multiplier Effect

The process by which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

Accelerator Principle

The concept that investment levels of firms directly depend on consumer demand, with increased confidence leading to increased investments.

Marginal Propensity to Consume (MPC)

The proportion of additional income that a consumer is likely to spend rather than save.

Economic Growth

An increase in the production of goods and services in an economy over a certain period.

GDP

The total monetary value of all final goods and services produced within a country's borders in a specific period.

Sustainable Development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Fiscal Policy

The use of government spending and taxation to influence the level of economic activity and aggregate demand.

Business Cycle

The periodic fluctuations in economic activity, characterized by phases of expansion, peak, contraction, and trough.

Seasonal Unemployment

Unemployment that arises from seasonal shifts in the demand for labor in certain industries.

Deflation

A persistent decrease in the general price level of goods and services within an economy.

Real GDP

A measure of the value of economic output adjusted for inflation or deflation.

Nominal GDP

The total value of all goods and services produced at current market prices without adjustment for inflation.

Hyperinflation

Extremely rapid or out-of-control inflation that erodes the real value of the local currency.

Supply-side Economics

A theory suggesting that economic growth is best stimulated by lowering taxes and decreasing regulation to increase production.

Aggregate Demand

The total demand for final goods and services in an economy at a given time and price level.