Econ Exam Unit 3

Equilibrium Wage

Wage where total labor supply and demand meet.

Labor Supply Curve

Higher wages increase the quantity of labor supplied.

Labor Demand Curve

Higher wages decrease the quantity of labor demanded.

Law of Demand for Labor

Higher wages lead to lower labor demand.

Wage Determination

Wages are controlled by supply and demand.

Blue-Collar Worker

Jobs involving manual or physical labor.

White-Collar Worker

Professional or clerical jobs, often office-based.

Learning Effect

Higher education increases productivity and wages.

Screening Effect

A college degree signals intelligence to employers.

Glass Ceiling

Invisible barrier that limits women's career advancement.

Stereotype

Oversimplified belief about a group of people.

Discrimination

Unfair treatment based on group membership.

Wage Discrimination

Unequal pay for people with similar qualifications and jobs.

Labor Force

People 16+, nonmilitary, employed or actively seeking work.

Not in the Labor Force

People not working or actively seeking work.

Unemployment Rate Formula

(Unemployed ÷ Total Labor Force) × 100

Unemployment Rate on Friend's Test

8%

Frictional Unemployment

Temporary unemployment from changing jobs or being laid off.

Seasonal Unemployment

Unemployment caused by seasonal changes in work.

Structural Unemployment

Workers' skills do not match available jobs.

Cyclical Unemployment

Unemployment caused by economic recessions.

Underemployment

Working below your qualifications or education level.

Discouraged Workers

People who have stopped looking for work.

Inflation

A general increase in prices over time.

Purchasing Power

Decreases when inflation increases.

Consumer Price Index (CPI)

Tracks changes in consumer prices over time.

Inflation Rate Formula

[(New CPI − Old CPI) ÷ Old CPI] × 100

Inflation on Friend's Test

400%

Quantity Theory

Too much money in the economy causes inflation.

Demand-Pull Theory

Excess demand causes prices to rise.

Cost-Push Theory

Higher production costs cause prices to rise.

Wage-Price Spiral

Higher wages raise production costs, causing prices and wage demands to rise.

Creeping Inflation

Mild inflation of about 3% or less per year.

Walking Inflation

Moderate inflation of about 3-10% per year.

Galloping Inflation

Rapid inflation of about 10% to hundreds of percent per year.

Hyperinflation

Extreme inflation of 50% or more per month.

Toilet Paper Shortage Example

Supply and demand.

Jack in the Box Example

Wage-price spiral.

Federal Reserve Inflation Target

2% annually for price stability.

Healthy Unemployment Rate

Approximately 4-6% according to class notes.

Causes of Poverty

Unemployment, low wages, lack of education, discrimination, and inequality.

Adapting to Labor Market Changes

Develop new skills and education to meet job demands.