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Economics Ch 13 test

MA: discouraged workers
chronically unemployed people who have been out of work for six months or more
MA: underemployed workers
those workers who have a job but earn insufficient income for them to be able to provide a living for themselves.
MA: cyclical unemployment
unemployment caused by the downside of the business cycle
MA: Frictional unemployment
unemployment that results merely because people are temporarily between jobs
MA: seasonal unemployment
unemployment occurring when the labor force needed for certain industries or businesses expands and contracts seasonally
MA: structural unemployment
unemployment that occurs when when workers’ skills do not match available jobs.
ESSAY: explain the downward spiral of the recession phase
during a recession consumers gradually adjust their spending habits. THe first type of purchase to decline is the major consumer durable goods. When consumers buy them they buy them on credit, but the purchases decrease due to lack of faith of full repayment. As the sales of such items decline, suppliers cut their prices to sell excess inventory. Factory owners lower their production rate which requires fewer workers. Employees get laid off. a downward spiral develops: the newly unemployed reduce their spending, thereby further decrease demand and causing even greater unemployment.
SA: define the business cycle and what are its phases
the business cycles consists of alternating periods or phases when the real gross domestic product rises and falls. the four phases of the business cycle: expansion, peak, recession, and trough
SA: what is the lowest phase of the business cycle called
it is called a trough
SA: peak phase is stopped by limitation, what are the 3 limitations and the 3 problems for consumers
the three limitations: limited raw materials, limited labor, and limited financial capital.
the three problems: sales of almost all goods hit record levels, the expanding economy causes the price of labor to rise, an increase in the costs that businesses must pay to borrow money.
SA: what is the labor force
the labor force includes the employed and the unemployed who are actively looking for a job.
SA: what theory is the most logical explanation for the business cycle, and what is the basic idea of the theory
it is the monetary theory. The theory states that increases in the money supply fuel the expansion phase.
SA: name and describe the five groups excluded from the labor force
those who are under sixteen or over sixty-four years of age; those who are in the armed forces; the homemakers, and those who are institutionalized in schools, prisons, or asylums.???? how to describe
SA: name and describe the 4 flaws in unemployment statistics
1. they do not count people who work as being employed.
2. they do not include int eh unemployment statistics some people who do not work.
3. they could some people as being employed when they are actually underemployed.
4. they count some people who do have jobs as unemployed.
SA: name the 3 types of unemployment that make up the natural level of unemployment
frictional unemployment, structural unemployment, and seasonal unemployment
SA: give two ways which Christian’s knowledge of the business cycle affect their financial behavior
1. they are able to better help those in need because they have the love of God.
2. it present opportunities to show the love of Christ by extending aid to those in need.
3. sacrificing your own personal things for the sake of others.
SA: what are the physical and emotional results of extended high unemployment in the nation, and how should Christians respond and why.
domestic and child abuse, death, psychological problems, divorces, starvation.
in the Bible, God states that we should love our neighbors as ourselves.

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