Unit 3 Income Distribution

Cost-Push Inflation

When prices rise due to an increase in the cost of production.

Demand-Pull Inflation

increases in the price level (inflation) resulting from an excess of demand over output at the existing price level, caused by an increase in aggregate demand

"Too much money chasing too few goods" best describes:

phrase associated with the Cause of demand pull inflation

Consumer Price Index (CPI)

a measure of the overall cost of the goods and services bought by a typical consumer

Real Wage

the nominal wage adjusted for changes in the price level

Nominal Wage

the dollar amount of the wage paid

Poverty Level

the minimum annual income needed by a family to survive as defined by the U.S. Census Bureau $14,891 individual; $29,960 family of 4

Medicare

A federal program of health insurance for persons 65 years of age and older

Welfare

government aid to the poor

SNAP/Food stamps

government coupons that can be used to purchase food

Poverty Level for a Family of 4

$26,500

Yellow Dog Contract

an agreement some companies forced workers to take that forbade them from joining a union. This was a method used to limit the power of unions, thus hampering their development.

Closed Shop

A company with a labor agreement under which union membership can be a condition of employment.

Open Shop

A company with a labor agreement under which union membership cannot be required as a condition of employment.

Shop Steward

union officials who work permanently in an organization and represent employee interests on a daily basis

Cost-of-living adjustment (COLA)

Automatic adjustments of nominal income to the rate of inflation

Progressive Tax

A tax for which the percentage of income paid in taxes increases as income increases

Proportional Tax

a tax for which the percentage of income paid in taxes remains the same for all income levels

Direct Tax

A tax that must be paid by the person on whom it is levied

Indirect Tax

A tax levied on one party but passed on to another for payment

Sales Tax

A tax on a sale of merchandise or services

Budget Deficit

a situation in which the government spends more than it takes in

National Debt

the total amount of money that a country's government has borrowed, by various means.

US Govt Budget Deficit in 2021

$ 2.7 Trillion

Structural Unemployment

unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.

Frictional Unemployment

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

Cyclical Unemployment

unemployment that rises during economic downturns and falls when the economy improves

The Natural Rate of Unemployment

5%

Who is counted in the Labor Force?

16+, looking for a job

Hidden Unemployment

Unemployment that’s not counted in official unemployment statistics, like discouraged workers

Underemployment

workers are overqualified for their jobs or work fewer hours than they would prefer

Discouraged workers (hidden unemployment)

individuals who would like to work but have given up looking for a job

Seasonal Unemployment

unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season

Someone who borrowed $100,000 dollars at a fixed interest rate would _______________ by inflation.

not be hurt

Someone who lent $100,000 dollars at a fixed interest rate would _______________ by inflation.

be hurt

Labor Strikes

a work stoppage intended to force an employer to respond to demands

Lockout

a company tool to fight union demands by refusing to allow employees to enter its facilities to work

Fringe Benefit

An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, bonus, privilege, etc.

Who would call for a Lockout?

mangement

Who would call for a Lockout?

workers

Collective Bargaining

Process by which a union representing a group of workers negotiates with management for a contract

Union Grievance

filing a formal complaint with the company, notifying the management that the union claims a contract violation.

Mediation

negotiation to resolve differences conducted by some impartial party, non-binding.

Binding Arbitration

process whereby a neutral party hears arguments from two opposing sides and makes a decision that both must accept

Medicaid

A federal and state assistance program that pays for health care services for people who cannot afford them, regardless of age. Is jointly funded by both the federal government and state governments.

Women, Infant, and Children (WIC)

a program that provides help for nutrition and health care to low-income women, infants, and children up to age 5

Supplemental Nutrition Assistance Program

Program that provides food benefits to low-income families to supplement their grocery budget so they can afford the nutritious food essential to health and well-being.

Housing Assistance Program (Section 8)

Program for assisting very low- income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market

Head Start

a preschool program for children from low-income families that also provides healthcare, nutrition services, and social services

Temporary Assistance for Needy Families (TANF)

Once called "Aid to Families with Dependent Children," the new name for public assistance to needy families.

What is the largest source of Federal Government Tax Revenue?

Individual Income Tax

Excise Tax

Consumer tax on a specific kind of merchandise, such as tobacco or alcohol.

Regressive Tax

A tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes.

As of April 2024, the foreign country that owns the greatest amount of the US National debt is

Japan

The Debt to GDP ratio as of April 2024

124%

W-4 Form

Employee's Withholding Allowance Certificate that shows the employer how much tax to withhold from an employee's check

W-2 Form

Given to employees by the end of January; summarizes an employee's earnings and tax withholdings for the year. Simple tax return form, often filled out by young people.

1040

Simple tax return form, often filled out by young people.

COLA

Increase in wage or salary design to keep pace with inflation, not a real wage increase.

Fringe Benefits

Any financial extras beyond the regular pay check, such as health insurance, life insurance, paid vacation and/or retirement

"Scab"

Negative term for a worker called in by an employer to replace striking laborers