Chapter 7 Flashcards Preview

ECO201 > Chapter 7 > Flashcards

Flashcards in Chapter 7 Deck (23)
Loading flashcards...
1
Q

Five Major Concerns

A
1 Production (GDP)
2 Economic Growth
3 Employment
4 Inflation
5 Debt
2
Q

Macro

A
  • “aggregate”

* Whole

3
Q

Business Cycle

A

Ups and downs in production over time

4
Q

Stages in the Business Cycle

A
  • Peak
  • Contraction (Recession)
  • Trough
  • Expansion
5
Q

Leading Indicators

A

1 Reduction in hours of the average work week
2 Rise in unemployment insurance claim
3 Increase in prices of raw materials
4 Drop in the quantity of money circulating

6
Q

Recession

A

2 or more consecutive quarters of GDP decline

7
Q

Unemployment

A

Being willing and able to work, actively looking but haven’t found a job

8
Q

Adult Population

A

civilization, free, adults

9
Q

Labor Force Participation Rate

A

A measure at how optimistic people are about the economy

10
Q

How do the LFPR of men compared to that of women?

A

Women rise because of higher opportunity cost

11
Q

Discouraged Workers

A

Still unemployed after six months

12
Q

Types of Unemployment

A
  • Frictional
  • Structural
  • Cyclical
  • Seasonal
13
Q

Frictional Unemployment

A
  • Caused by frictions in normal jobs processes
  • Economists do not worry about this type
  • Example: someone is offered two jobs, are unemployed for the moment as they decide on which job to pick
14
Q

Structural Unemployment

A
  • Caused by employee skills not aligning with what employees want
  • Employees are left unto retraining themselves
  • Example: 80s computer programmer lost job for 10 years leaving skills to become outdated
15
Q

Cyclical Unemployment

A
  • Government worries about this type the most
  • Recession causes this from laid off workers
  • Employees lose job because of economy failing and not of his/her own fault
16
Q

Seasonal Unemployment

A

• Employees get off the job when certain seasons pass

17
Q

Natural rate

A

Includes only frictional and structural unemployment when seasonally adjusted

18
Q

What happened in 2008/2009?

A

Market crashed after a housing bubble (people buying houses on debt) burst

19
Q

Nominal Values

A

Raw number

20
Q

Real Values

A
  • Adjusted number

* What we are really paying for

21
Q

Inflation

A

Rise in average prices

22
Q

Deflation

A

Drop in average prices

23
Q

Cost of Inflation

A

1 Higher nominal rates if you can anticipate
2 COLA (cost of living adjustment)
3 Menu cost of repricing
4 More inflation