ECON 213 CH 6 QUESTIONS AND
VERIFIED ANSWERS
misery index - ANSWER-unemployment rate + inflation rate
inflation - ANSWER-gradual rise in prices (builds upon past inflation - only continues to grow)
Tips (Treasury Inflation Protected Securities) - ANSWER-pay small fixed interest rate + adjustment based
on how prices change (when prices don't rise, TIPS pay a little/when prices rise a lot, TIPS pay a lot)
what causes inflation - ANSWER-demand factors, supply shocks, government policy
price level - ANSWER-absolute level of a price index
disinflation - ANSWER-reduction in the rate of inflation
deflation - ANSWER-when prices actually fall
consumer price index - ANSWER-the principal measure of inflation/ index of average prices for goods
commonly purchases (only includes private goods and services)
how to calculate consumer price index - ANSWER-current cost/ original cost x 100
or
new cpi value - old cpi value/old cpi value x 100
producer price index - ANSWER-index of average prices received by domestic producers for their output
(measures net revenue received by a firm for specific products)
GDP deflator - ANSWER-index of average prices for all goods and services (broadest measure of inflation)
how to find the nominal value - ANSWER-current year index or new price / base year index or old price x
real price of good
hyperinflation - ANSWER-extremely high rate of inflation (above 100% a year) - caused by excess
government spending over tax revenues (high budget deficits) and printing money to finance deficits
employed - ANSWER-people who have jobs
unemployed - ANSWER-people who don't have jobs and people who are ACTIVELY looking for jobs
labor force - ANSWER-total number of people who are either employed or unemployed
marginally attached workers - ANSWER-people available for work and actively looking for work during
the past 12 months (not counted in unemployment rate)
underemployed workers - ANSWER-people who take part-time jobs to earn money, while looking for
better jobs
discouraged workers - ANSWER-people who stop looking for work because there are not any good jobs
available
VERIFIED ANSWERS
misery index - ANSWER-unemployment rate + inflation rate
inflation - ANSWER-gradual rise in prices (builds upon past inflation - only continues to grow)
Tips (Treasury Inflation Protected Securities) - ANSWER-pay small fixed interest rate + adjustment based
on how prices change (when prices don't rise, TIPS pay a little/when prices rise a lot, TIPS pay a lot)
what causes inflation - ANSWER-demand factors, supply shocks, government policy
price level - ANSWER-absolute level of a price index
disinflation - ANSWER-reduction in the rate of inflation
deflation - ANSWER-when prices actually fall
consumer price index - ANSWER-the principal measure of inflation/ index of average prices for goods
commonly purchases (only includes private goods and services)
how to calculate consumer price index - ANSWER-current cost/ original cost x 100
or
new cpi value - old cpi value/old cpi value x 100
producer price index - ANSWER-index of average prices received by domestic producers for their output
(measures net revenue received by a firm for specific products)
GDP deflator - ANSWER-index of average prices for all goods and services (broadest measure of inflation)
how to find the nominal value - ANSWER-current year index or new price / base year index or old price x
real price of good
hyperinflation - ANSWER-extremely high rate of inflation (above 100% a year) - caused by excess
government spending over tax revenues (high budget deficits) and printing money to finance deficits
employed - ANSWER-people who have jobs
unemployed - ANSWER-people who don't have jobs and people who are ACTIVELY looking for jobs
labor force - ANSWER-total number of people who are either employed or unemployed
marginally attached workers - ANSWER-people available for work and actively looking for work during
the past 12 months (not counted in unemployment rate)
underemployed workers - ANSWER-people who take part-time jobs to earn money, while looking for
better jobs
discouraged workers - ANSWER-people who stop looking for work because there are not any good jobs
available
