Economic Challenge
Chapter 13
By Tatum Gulyas
Frictional Unemployment
Unemployment that occurs when people take time to find 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
Structural Unemployment
Unemployment that occurs when workers’ skills do not match the jobs that are available
Cyclical Unemployment
Unemployment that rises during economic downturns and falls when the economy improves
Census
An official count of the population
Unemployment Rate
The percentage of the nation’s labor force that is unemployed
Full Employment
The level of employment reached when there is no cyclical unemployment
Underemployment
Working at a job for which one is over-qualified, or working part-time when full-time is desired
Discouraged Worker
A person who wants a job but has given up looking
Inflation
A general increase in prices
Purchasing Power
The ability to purchase goods and services
Price Index
A measurement that shows how the average price of a standard group of goods changes over time
Consumer Price Index (CPI)
A price index determined by measuring the price of standard group of goods meant to be represented the “market basket” of a typical urban consumer
Market Basket
A representative collection of goods and services
Inflation Rate
The percentage rate of change in price level over time
Core Inflation Rate
The rate of inflation excluding the effects of food and energy prices
Hyperinflation
Inflation that is out of control
Quantity Theory
Theory that too much money in the economy causes inflation
Demand-Pull Theory
Theory that inflation occurs when demand for goods and services exceeds existing supplies
Cost-Push Theory
Theory that inflation occurs when producers raise prices in order to meet increased costs
Wage-Price Spiral
The process by which rising wages cause higher prices, and higher prices cause higher wages
Fixed Income
Income that does not increase even when prices go up
Deflation
A sustained drop in the price level
Poverty Threshold
The income level below which income is insufficient to support a family or household
Poverty Rate
The percentage of people who live in households with income below the official poverty line
Income Distribution
How the nation’s total income is distributed among its population
Food Stamps
Government-issued coupons that recipients exchange for food
Lorenz Curve
The curve that illustrates income distribution
Enterprise Zone
Area where companies can locate free of certain local, state, and federal taxes and restrictions
Block Grant
Federal funds given to the states in lump sums
Workfare
A program requiring work in exchange for temporary assistance