IB Economics - Macro Quiz Part II

Unemployment

People who are willing, able, and actively seeking employment, but unable to find it.

Full Unemployment

Percentage of people structurally, frictionally, and seasonally unemployed

Labor Force

People of working age (18-65) who are employed or unemployed SEEKING work.

Discouraged workers

People who are of working age but have been unemployed and not currently looking for a job. They are not included in the workforce.

Disinflation

is when the average price level is continuing to rise but at a slower rate. The rate of inflation is still positive but lower than previously recorded

Deflation

a sustained decrease in the average price level or a negative inflation rate

CPI

Consumer Price Index (CPI) is the average price of goods and services that consumers typically buy ( market basket ) expressed as an index

Inflation

A general or sustained increase in the average price level

Demand-pull inflation

Inflation as a result of an increase in AD (C, I,G, Xn). Price Level is PULLED UP

Cost-push inflation

Inflation as a result of an increase in costs of production in the economy (Increase in price of raw materials, imports, or labor). Price Level is PUSHED UP.

Equality

Situations where economic outcomes are the same for all.

Equity

Refers to the idea of fairness. Different people are given different things to promote equity.

progressive taxation

progressive taxation is a system where the tax rate increases as a person's income increases, meaning higher-income individuals pay a larger percentage of their income in taxes.

Regressive Taxation

a regressive tax is a tax where the tax rate decreases as the taxpayer's income or ability to pay increases. This is because the tax takes a larger percentage of income from lower-income earners than from higher-income earners, even if the tax is applied at a flat rate across all income levels.

Proportional Taxation

a system where all taxpayers pay the same percentage of their income, regardless of their income level

Seasonal Unemployment

a type of unemployment that occurs when the demand for labor in certain industries fluctuates predictably over the course of the year due to seasonal changes in demand or weather

Frictional Unemployment

temporary unemployment of workers who are between jobs, have voluntarily quit to find a better one, or are new entrants to the labor force

Structural Unemployment

Long-term unemployment resulting from a mismatch between the skills of workers and the skills required for available jobs, or from geographical or labor market rigidities

Cyclical Unemployment

Unemployment caused by a downturn or recession in the economic business cycle. It occurs when there is a lack of aggregate demand for goods and services, leading firms to reduce production and lay off workers.

Hidden Unemployment

refers to individuals who are not counted in official unemployment statistics, such as those who have given up looking for work (discouraged workers) or are underemployed, meaning they work part-time or in jobs that do not utilize their skills.

Informal Economy

economic activities that are not formally registered, regulated, or protected by the state

Social Mobility

the change in an individual's or family's position within the socio-economic hierarchy over time, and it can be measured by factors like income, social class, education, and occupation

UBI 

a government-provided, regular, and unconditional cash payment to all individuals in a society, regardless of their income or employment status

Gini Coefficient

Measure of distribution of income within an economy. This coefficient is usually used to determine the level of income inequality.

Absolute poverty

a condition where individuals or households lack the minimum income needed to meet basic survival needs such as food, clean water, shelter, and healthcare

Relative Poverty

the condition of having an income significantly below the average income in a specific country or society