Chapter 13 Assessment

Chapter Summary

A summary of major ideas in Chapter 13 appears below. See also the Guide to the Essentials of Economics, which provides additional review and test practice of key concepts in Chapter 13.

• Section 1 Unemployment (pp. 331–336)

  Unemployment affects millions of Americans each year. Causes of unemployment vary, so unemployment is categorized into seasonal, frictional, structural, and cyclical unemployment. The Bureau of Labor Statistics tracks unemployment and determines the unemployment rate. Economists use the unemployment rate as an indicator of the health of the overall economy.

• Section 2 Inflation (pp. 338–343)

  A general increase in prices is known as inflation. Economists use indexes to measure inflation and its effects on consumers and producers. The best-known index is the Consumer Price Index (CPI), which uses prices of a group of consumer goods called the market basket. Inflation affects many aspects of our everyday lives, from how much we earn to how much our earnings can purchase.

• Section 3 Poverty (pp. 345–350)

  Despite the tremendous success of our nation's economy, millions of Americans remain poor. Causes of poverty range from lack of education to racial and gender discrimination. Federal, state, and local governments administer programs to help people whose incomes place them below the poverty threshold, the income level needed to meet a family's minimum needs.

Key Terms

Match the following definitions with the terms listed below. You may not use all of the terms.

• inflation
• full employment
• poverty rate
• wage-price spiral
• structural unemployment
• discouraged workers
• deflation
• price level
• Lorenz Curve
• poverty threshold

1. occurs when the skills that workers have do not match the jobs that are available
2. the percentage of people in a particular group who live in households below the official poverty threshold
3. an increase in the general level of prices
4. process by which rising wages cause higher prices and higher prices cause higher wages
5. an average of the prices of goods and services in the economy
6. the level of employment reached when there is no cyclical unemployment
7. illustrates the distribution of income in the economy

Using Graphic Organizers

8. On a separate sheet of paper, copy the tree map below. Chart the four types of unemployment, and list the causes of each.

   

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