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    Consumer Price Index (CPI)

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    The document defines key economic terms including: 1) The consumer price index and producer price indexes which measure prices for consumers and producers. 2) Types of unemployment such as cyclical, discouraged worker effect, frictional, and structural unemployment. 3) Definitions for employed, unemployed, labor force, and not in labor force. 4) Terms related to economic growth including output growth, per-capita output growth, and productivity growth.

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    Consumer Price Index (CPI)

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    mira
    25 views3 pages
    The document defines key economic terms including: 1) The consumer price index and producer price indexes which measure prices for consumers and producers. 2) Types of unemployment such as cyclical, discouraged worker effect, frictional, and structural unemployment. 3) Definitions for employed, unemployed, labor force, and not in labor force. 4) Terms related to economic growth including output growth, per-capita output growth, and productivity growth.

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    The document defines key economic terms including: 1) The consumer price index and producer price indexes which measure prices for consumers and producers. 2) Types of unemployment such as cyclical, discouraged worker effect, frictional, and structural unemployment. 3) Definitions for employed, unemployed, labor force, and not in labor force. 4) Terms related to economic growth including output growth, per-capita output growth, and productivity growth.

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    25 views3 pages

    Consumer Price Index (CPI)

    Uploaded by

    mira
    The document defines key economic terms including: 1) The consumer price index and producer price indexes which measure prices for consumers and producers. 2) Types of unemployment such as cyclical, discouraged worker effect, frictional, and structural unemployment. 3) Definitions for employed, unemployed, labor force, and not in labor force. 4) Terms related to economic growth including output growth, per-capita output growth, and productivity growth.

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    of 3

    Chapter 22

     consumer price index (CPI): A price index computed each month by the Bureau of Labor
    Statistics using a bundle that is meant to represent the “market basket” purchased
    monthly by the typical urban consumer.

     producer price indexes (PPIs): Measures of prices that producers receive for products at
    all stages in the production process.
    - Once called wholesale price indexes, PPIs are calculated separately for various
    stages in the production process.

     cyclical unemployment: Unemployment that is above frictional plus structural


    unemployment.

     discouraged worker effect: The decline in the measured unemployment rate that results
    when people who want to work but cannot find jobs grow discouraged and stop looking,
    thus dropping out of the ranks of the unemployed and the labor force.

    - If a BLS survey respondent cites inability to find employment as the sole reason
    for not searching for work, that person might be classified as a discouraged
    worker.
    - Some economists argue that including the number of discouraged workers as
    unemployed gives a better picture of the unemployment situation.

     Employed: Any person 16 years old or older


    (1) who works for pay, either for someone else or in his or her own business for 1 or
    more hours per week,
    (2) who works without pay for 15 or more hours per week in a family enterprise, or
    (3) who has a job but has been temporarily absent with or without pay.

     Unemployed: A person 16 years old or older who is not working, is available for work,
    and has made specific efforts to find work during the previous 4 weeks.

     frictional unemployment: The portion of unemployment that is as a result of the


    normal turnover in the labor market; used to denote short-run job/skill-matching
    problems.
     structural unemployment: The portion of unemployment that is as a result of
    changes in the structure of the economy that result in a significant loss of jobs in
    certain industries.
     natural rate of unemployment: The unemployment rate that occurs as a normal part
    of the functioning of the economy. Sometimes taken as the sum of the frictional
    unemployment rate and the structural unemployment rate.
     labor force: The number of people employed plus the number of unemployed.

     not in the labor force: A person who is not looking for work because he or she does
    not want a job or has given up looking.

     output growth: The growth rate of the output of the entire economy.
     per-capita output growth: The growth rate of output per person in the economy.
     productivity growth: The growth rate of output per worker.
     Administrative Costs and Inefficiencies
    - There may be costs associated even with anticipated inflation, such as the
    administrative cost associated with simply keeping up.
    - Interest rates tend to rise with anticipated inflation. When interest rates are
    high, the opportunity costs of holding cash outside banks is high.

     Inflation May Change the Distribution of Income


    - The effects of anticipated inflation on the distribution of income are likely to
    be fairly small, since people and institutions will adjust to the anticipated
    inflation.
    - Unanticipated inflation may have large effects, depending, among other
    things, on the amount of indexing to inflation.
     real interest rate: The difference between the interest rate on a loan and the inflation
    rate.
    - Actual inflation that is higher (lower) than anticipated benefits debtors
    (creditors).

     Equations:
    Chapter

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