Term
|
Definition
| the total number of workers, including both the employed and the unemployed |
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Term
|
Definition
| the percentage of the labor force that is unemployed |
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Term
| Unemployment Rate (formula) |
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Definition
| [# of unemployed / labor force] x 100 |
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Term
| Labor-Force Participation Rate |
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Definition
| the percentage of the adult population that is in the labor force |
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Term
| Labor-Force Participation Rate (formula) |
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Definition
| [labor force / adult population] x 100 |
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Term
| Natural Rate of Unemployment |
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Definition
| the normal rate of unemployment around which the employment rate fluctuates |
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Term
|
Definition
| the deviation of unemployment from its natural rate |
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Term
|
Definition
individuals who would like to work but have given up looking for a job
[do not show up in unemployment statistics] |
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Term
|
Definition
| Most spells of unemployment are [short/long], and most unemployment observed at any given time is [short-term/long-term] |
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Term
|
Definition
| unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills |
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Term
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Definition
| form of unemployment that is often though to explain relatively short spells of unemployment |
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Term
|
Definition
| unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one |
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Term
|
Definition
| form of unemployment that is often thought to explain longer spells of unemployment |
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Term
|
Definition
| the process by which workers find appropriate jobs given their tastes and skills |
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Term
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Definition
| a government program that partially protects workers' incomes when they become unemployed |
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Term
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Definition
| If wage is kept above the equilibrium level for any reason, the result is ____________. |
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Term
|
Definition
| a worker association that bargains with employers over wages, benefits, and working conditions |
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Term
|
Definition
| the process by which unions and firms agree on the terms of employment |
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Term
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Definition
| the organized withdrawl of labor from a firm by a union |
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Term
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Definition
| above-equilibrium wages paid by firms to increase productivity |
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Term
1) Worker Health
2) Worker Turnover
3) Worker Quality
4) Worker Effort |
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Definition
| 4 Types of Efficiency Wage Theory |
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Term
1) Medium of exchange
2) Unit of account
3) Store of value |
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Definition
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Term
|
Definition
| the set of assets in an economy that people regularly use to buy goods and services from other people |
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Term
|
Definition
| an item that buyers give to sellers when they want to purchase goods and services |
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Term
|
Definition
| the yardstick people use to post prices and record debts |
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Term
|
Definition
| an item that people can use to transfer purchasing power from the present to the future |
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Term
|
Definition
| the ease with which an asset can be converted into the economy's medium of exchange |
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Term
|
Definition
| money that takes the form of a commodity with intrinsic value [ex. gold or silver] |
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Term
|
Definition
| money without intrinsic value that is used as money because of government decree |
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Term
|
Definition
| the paper bills and coins in the hands of the public |
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Term
|
Definition
| balances in bank accounts that depositors can access on demand by writing a check |
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Term
|
Definition
| currency, demand deposits, traveler's checks, other checkable deposits |
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Term
|
Definition
| everything in M1, savings deposits, small time deposits, money market mutual funds, a few minor categories |
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Term
|
Definition
| the central bank of the United States |
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Term
|
Definition
| an institution designed to oversee the banking system and regulate the quantity of money in the economy |
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Term
|
Definition
| When financially troubled banks find themselves short of cash, the Fed acts as a _________________. |
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Term
|
Definition
| the quantity of money available in the economy |
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Term
|
Definition
| the setting of the money supply by policy makers in the central bank |
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Term
|
Definition
| The Fed's primary tool is the ________________ - the purchase and sale of US government bonds. |
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Term
|
Definition
| The Fed's policy decisions have an important influence on the economy's rate of inflation in the [LR/SR] and the economy's unemployment and production in the [LR/SR]. |
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Term
|
Definition
| deposits that banks have received but have not loaned out |
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Term
| 100-percent-reserve banking |
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Definition
| imaginary economy in which all deposits are held as reserves |
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Term
|
Definition
| If banks hold all deposits in reserve, banks [do/do not] influence the supply of money. |
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Term
| Fractional-Reserve Banking |
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Definition
| a banking system in which banks hold only a fraction of deposits as reserves |
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Term
|
Definition
| the fraction of deposits that banks hold as reserves |
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Term
|
Definition
| When banks hold only a fraction of deposits in reserve, banks [create/get rid of] money. |
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Term
|
Definition
| the amount of money the banking system generates with each dollar of reserves |
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Term
|
Definition
| The money multiplier is the reciprocal of the ____________. |
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Term
|
Definition
| The higher the reserve ratio, the [more/less] of each deposit banks loan out, and the [larger/smaller] the money multiplier. |
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Term
|
Definition
| regulations on the minimum amount of reserves that banks must hold against deposits |
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Term
|
Definition
| the interest rate on the loans that the Fed makes to banks |
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Term
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Definition
| In the [SR/LR], the overall level of prices adjusts to the level at which the demand for money equals supply. |
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Term
|
Definition
| a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate |
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Term
|
Definition
| variables measured in monetary units |
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Term
|
Definition
| variables measured in physical units |
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Term
|
Definition
| the theoretical separation of nominal and real variables |
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Term
|
Definition
| the proposition that changes in the money supply do not affect real variables |
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Term
|
Definition
| the rate at which money changes hands |
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Term
|
Definition
| Velocity of Money (formula) |
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Term
|
Definition
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Term
|
Definition
| the equation, M x V = P x Y, which relates the quantity of money, the velocity of money, and the dollar value of the economy's output of goods and services |
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Term
|
Definition
| the revenue the government raises by creating money |
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Term
|
Definition
| the one-for-one adjustment of the nominal interest rate to the inflation rate |
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Term
|
Definition
| When the Fed increases the rate of money growth, the LR result is a [higher/lower] inflation rate and a [higher/lower] nominal interest rate. |
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Term
|
Definition
| the resources wasted when inflation encourages people to reduce their money holdings |
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Term
|
Definition
| the costs of changing prices |
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Term
|
Definition
| Most economists believe that classical theory describes the world in the [SR/LR] but not in the [SR/LR]. |
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Term
| Model of Aggregate Demand and Aggregate Supply |
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Definition
| the model that most economists use to explain short-run fluctiations in economic activity around its long-run trend |
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Term
|
Definition
| a curve that shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level |
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Term
|
Definition
| a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level |
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Term
| raises; wealthier; spend; spending; larger |
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Definition
| A decrease in the price level [raises/lowers] the real value of money and makes consumers [wealthier/poorer], which in turn encourages them to [spend/save] more. The [increase/decrease] in consumer [spending/saving] means a [larger/smaller] quantity of goods and services demanded. |
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Term
| reduces; greater; increases |
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Definition
| A lower price level [increases/reduces] the interest rate, causing [less/greater] spending on invest ment goods, and there by [decreasing/increasing] the quantity of goods and services demanded. |
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|
Term
1) consumers are wealthier, which stimulates the demand for consumption of goods.
2) interest rates fall, which stimulates the demand for investment goods.
3) the currency depreciates, which stimulates demand for exports. |
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Definition
| 3 Reasons a Fall in Price Level Increases the Quantity of G/S Deanded |
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|
Term
1) Changes in consumption
2) Changes in investment
3) Changes in government purchases
4) Changes in net exports |
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Definition
| 4 Reasons for Shift in Aggregate-Demand Curve |
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Term
|
Definition
| In the [SR/LR], the aggregate-supply curve is vertical, whereas in the [SR/LR], the aggregate-supply curve is upward sloping. |
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Term
|
Definition
| An event that makes consumers spend more at a given price level [tax cut, stock-market boom] shifts aggregate demand curve [right/left]. |
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Term
|
Definition
| An event that makes consumers spend less at a given price level [tax hike, stock-market decline] shifts aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| An event that makes firms invest more at a given price level [optimism about the future, fall in interest rates due to increase in money supply] shifts the aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| An event that makes firms invest less at a given price level [pessimism about the future, a rise in interest rates due to decrease in money supply] shifts aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| An increase in government purchases of goods and services [greater spending on defense or highway construction] shifts the aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| A decrease in government purchases on goods and services [cutback in defense or highway spending] shifts the aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| An event that raises spending on net exports at a given price level [a boom overseas, speculation that causes an exchange-rate depreciation] shifts the aggregate-demand curve to the [right/left]. |
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Term
|
Definition
| An event that reduces spending on net exports at a given price level [a recession overseas, speculation that causes an exchange-rate appreciation] shifts the aggregate-demand curve to the [right/left]. |
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|
Term
1) The Wealth Effect
2) The Interest-Rate Effect
3) The Exchange-Rate Effect |
|
Definition
| Why does Aggregate-Demand Curve Slop Downward? [3 Reasons] |
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Term
|
Definition
| a lower price level increases real wealth, which encourges spending on consumption |
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Term
|
Definition
| a lower price level reduces the interest rate, which encourages spending on investment |
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Term
|
Definition
| a lower price level causes the real exchange rate to depreciate, which encourages spending on net exports |
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|
Term
1) The Sticky-Wage Theory
2) The Sticky-Price Theory
3) The Misperceptions Theory |
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Definition
| Why does the Short-Run Aggregate-Supply Curve Slope Upward? (3 Reasons) |
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Term
|
Definition
| an unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services |
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Term
|
Definition
| an unexpectedly low price level leaves some firms with higher-than-desired prices, which depresses their sales and leads them to cut back production |
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|
Term
| The Misperceptions Theory |
|
Definition
| an unexpectedly low price level leads some suppliers to think their relative prices have fallen, which induces a fall in production |
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|
Term
1) Changes in Labor
2) Changes in Capital
3) Changes in Natural Resources
4) Changes in Technological Knowledge
5) Changes in Expected Price Level |
|
Definition
| 5 Reasons for Shift in Short-Run Aggregate-Supply Curve |
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Term
|
Definition
| An increase in the quantity of labor available [perhaps due to a fall in the natural rate of unemployment] shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| A decrease in the quantity of labor available [perhaps due to a rise in the natural rate of unemployment] shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| An increase in the physical or human capital shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| A decrease in physical or human capital shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| An increase in the availability of natural resources shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| A decrease in the availability of natural resources shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| An advance in technological knowledge shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| A decrease in the available technology [perhaps due to government regulation] shifts the aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| A decrease in the expected price level shifts the short-run aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| An increase in the expected price lefel shifts the short-run aggregate-supply curve to the [right/left]. |
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Term
|
Definition
| In the [SR/LR], shifts in aggregate demand cause fluctuations in the economy's output of goods and services. |
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Term
|
Definition
| In the [SR/LR], shifts in aggregate demand affect the overall price level but do not affect output. |
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Term
|
Definition
| a period of falling output and rising prices |
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