Ch. 6 Flashcards
(15 cards)
Price level
A weighted average of the prices of all good and services.
price index
A measure of the price level.
Consumer Price Index (CPI)
The weighted average of prices of a specific set of goods and services purchased by a typical household; a widely cited index number for the price level.
base year
The year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year.
inflation
An increase in the price level.
real income
Nominal income adjusted for price changes.
nominal income
The current dollar amount of a person’s income.
unemployment rate
The percentage of the civilian force that is unemployed: Unemployment rate = Number of unemployed persons/Civilian labor force
employment rate
The percentage of the civilian noninstitutional population that is employed: Employment rate = Number of employed persons/Civilian noninstitutional population.
Labor Force Participation Rate
The percentage of the civilian noninstitutional population that is in the civilian labor force: Labor force participation rate = Civilian labor force/Civilian noninstitutional population.
Frictional unemployment
Unemployment that is due to the natural frictions in the economy and that is caused by changing market conditions and represented by qualified individuals with transferable skills who change jobs
structural unemployment
Unemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified.
natural unemployment
Unemployment caused by frictional and structural factors in the economy: Natural unemployment rate = Frictional unemployment rate + Structural unemployment rate
full employment
The condition that exists when the unemployment rate is equal to the natural unemployment rate.
cyclical unemployment rate
The difference between the unemployment rate and the natural unemployment rate.
