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macroeconomics quiz 3

  • natural rate of unemployment - the long term rate of unemployment
  • full employment - when virtually all who are able and willing to work are employed
  • discouraged worker - someone who is unemployed for a long period of time and stops looking for work
  • jobless DOES NOT EQUAL unemployed
  • people who are not a part of the labor force - People under the age of 16, Persons in prison or the military, Persons not looking for work but old enough to
  • Structural Unemployment - Someone who has certain skills and is a hard worker but the jobs available require other skills
  • Frictional Unemployment - The time someone is unemployed while they transition to a new position at a different company or when their new job hasn't started yet
  • Structural Unemployment - Someone who wants to work but doesn't live where jobs are located and is unable to move there.
  • money illusion - When someone uses nominal dollars rather than real dollars to estimate their current wealth
  • Price Stability - when the average price level doesn't go up or down too quickly in an economy
  • Average prices increase AND decrease in an economy.
  • Increased spending directly causes an increase in amount of inflation within an economy
  • the core inflation excludes price of energy and food in its calculation
  • People with debt benefit from unpredicted inflation, ceteris paribus
  • People or businesses earning commission or with other variable incomes are most likely to be harmed by deflation, ceteris paribus
  • components of a country's Aggregate Demand - Investment Spending, Government Spending, Consumption Spending, Net Exports
  • Full-employment GDP - the value of total market output (stuff being made in the economy) that corresponds with price stability in the economy
  • If an economy isn't producing enough to be at the full-employment rate of output (x-axis), we have higher unemployment because we don't need as much labor when we produce less stuff
  • The business cycle - alternating periods of economic growth and contraction
  • The level of long-run aggregate supply is equal to the full-employment rate of output in an economy.
  • The aggregate supply and demand model can help us model inflation in an economy
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