Econ Chapter 13 Notes (PT. 2) Flashcards

1
Q

Measuring Unemployment?

A
  • Does not include people who have stopped looking for work (Discouraged workers)
  • Also does not include people working for family businesses without pay
  • Estimate can be difficult to measure, especially about underground economy (illegal activities)
  • Full Employment: 5% or less unemployment
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2
Q

Inflation?

A

When prices go up; decreases purchasing power

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3
Q

Measures of Inflation?

A
  • Consumer Price Index (CPI): Inflation Rate
  • Bureau of Labor Statistics measures of change in price of market basket of hundreds of items (monthly)
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4
Q

Causes of Inflation? (List 3)

A
  • Demand-Pull
  • Cost-Push
  • Excessive Monetary Growth
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5
Q

Demand-Pull?

A

All sectors of the economy try to buy more than is produced

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6
Q

Cost-Push?

A

Where price of inputs (like oil or labor) increase, producers raise price to keep profits

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7
Q

Excessive Monetary Growth?

A

When money supply grows faster than Real GDP

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8
Q

Wage Price Spiral?

A
  • Begins when workers ask for a higher price
  • More spending leads to higher prices
  • Workers ask for a higher price
  • And so on . . .
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