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Vocab
Types of Unemployment
Causes of Inflation and Deflation
Cost of Inflation
Cost of Deflation
100
A sustained decrease in general price level

Deflation

100

Unemployment that occurs when the demand for labor in certain industries changes on a seasonal basis because of variations in needs.

Seasonal Unemployment

100

Inflation caused by increases in aggregate demand

Demand Pull Inflation

100

The redistribution of incomes of certain groups in a economy to other groups.

Redistribution effect

100

As purchasing power falls, its harder to repay debts.

Increase in the real value of debt

200
A measure of the cost of living for the typical household, and compares the value of a basket of goods and services in one year with the value of the same basket in a base year.

Consumer Price Index

200

Unemployment that occurs during the downturns of the business cycle.

Cyclical Unemployment

200

Inflation caused by increases in costs of production or supply-side shocks.

Cost-push Inflation

200

The ability to accurately predict what inflation will be in the future

Uncertainty

200

The signalling and incentive function of prices are unable to work effectively, leading to this.

Inefficient resource allocation

300

The number of people who are employed + the number of people of working age who are unemployed

Labor Force

300
Unemployment that occurs as a result of changes in demand for particular types of labor skills, changes in the geographical location of industries and therefore jobs, and labor market rigidities.

Structural Unemployment

300

The two reasons by deflation rarely occurs

Wages of workers do not fall, Price Wars

300

Savers will be negatively impacted by inflation as they lose if they receive no interest on savings, which creates an incentive on not saving.

Effect on Saving

300

Firms are not able to pay their debts, leading to this

Risk of bankruptcies

400

The decrease in the rate of inflation

Disinflation

400

Unemployment that occurs when the workers are between jobs (Searching for job, Fired from Job)

Frictional Unemployment

400

Business pessimism can cause this shift in the AD-AS model, which will cause deflation 

Decrease in aggregate demand

400

When the price level in a country increases more rapidly than the price level in other countries whom they trade with, its exports becomes more expensive, and imports become more cheap to domestic buyers.

International Export Competitiveness

400

People start spending less because of deflation, leading to a harder time for policy makers

Policy Ineffectiveness

500

Consumers postpone spending as they expect that prices will continue to fail.

Deferred Consumption

500

Another name for Cyclical Unemployment

Demand-deficient unemployment 

500

a decrease in input prices can cause this shift on a AD-AS model, which causes deflation

Increase in aggregate supply

500

High Inflation does not favor Economic Growth

Effect on Economic Growth
500

Bankruptcies will make banks and financial institution collapse, which can lead to this

Financial Crisis