ECO Chapter 10
Terms in this set (49)
Exists at any time during the business cycle
Unemployment occurs when someone
wants to work but cannot find a job
In the US, the working age population refers to
The civilian, noninstitutional population aged 16 and over
The labor force consists of people in the working age population who are?
-either employed or unemployed
-currently working or who would like to work and are actively trying to find a job
-non retired, full time student, or stay-at-home parent
If you hear that umemployment increase in the last year by 3.5 percentage points to 8 percent it means:
35 out of every 1,000 people lost their job in the last year
Matt is a college graduate who majored in creative writing and currently works at a local bookstore as a sales clerk. The best way to describe Matt is to say he is:
Sonia has a PhD in art history, and it currently working full time as a waitress. The Bureau of Labor Statistics would count Sonia as:
The labor demand curve
-Shows the relationship between the total quantity of labor demanded by all the firms in the economy and the wage rate
-shows that all things being equal, firms will want to hire more labor when wages are lower and less labor when wages are higher
-has negative slope
The natural rate of employment
is the normal level of unemployment that persists in an economy in the long run
When the economy is going strong
the demand for workers increases
An economic boom predicts the new equilibrium wage would be
higher because the labor demand curve shifts right
When economists say wages are "sticky" they mean that they
are slow to adjust to changes in the economy, and can cause unemployment
A minimum wage is
the lowest wage that a firm legally allowed to pay its workers
Labor unions are
groups of employees who join together to bargain with their employees over salaries and work conditions
Efficiency wages are
-wages deliberately set above the market rate in order to increase productivity
-a cause of unemployment
-an incentive for an employee to work hard to keep his job
Unemployment insurance is
-offered by the government as a way to affect the level of frictional unemployment
-offered by the government as a way to affect the level of structural unemployment
-money that is paid by the government to people who are unemployed
Maria has started looking for work after taking time off to have a baby.
Juan left high school without graduating and cant find a job he is qualified for.
Rohit had a job working on Wall Street but lost his job during the financial crisis.
Adam has just arrived in a new city and is looking for work.
Max wants to work as an air steward, but because the airline industry is heavily unionized there are few jobs available.
Jada has just lost her job in a Web startup that was effected by a downturn in the economy.
is a situation where someone wants to work but cannot find a job in the current market
refers to people who are in the working age population and are either employed or unemployed
number of employed people divided by the number of people in the labor force
Unemployment rate formula
Number of unemployed
labor force x 100
working age population
labor force+employed+ unemployed
Labor Force population rate
________________________ x 100
working age population
people who have looked for work in the past year but have given up because of labor market conditions
people who are either working less than they would like or in jobs below their skill level
Equilibrium in the labor market
Labor demand curve
shows the relationship between the total quantity of labor demanded by all firms in the economy and the wage rate
Labor supply curve
shows the relationship between the total labor supplied in the economy and the wage rate
What will happen if you offer more salaries, than equilibrium salaries?
it will create unemployment in the market because salary are increasing they search for jobs but cant find them.
Natural rate of unemployment
normal level of unemployment that persists in an economy in the long run
is caused by workers who are changing location, job, or career
is caused by a mismatch between the skills workers can offer and the skills in demand
Real wage or classical unemployment
results from wages being higher then the market clearing level (equilibrium wage)
is caused by short term economical fluctuations (recessions)
-this is bad for the economy
they are slow to respond to shifts in the economy
Mary is temporarily unemployed after she decides to move to NYC for better job prospects
Montanta increases its minimum wage, which makes it difficult for david to find work
Advances in computer aided architechure technology leaves Ann, a drafter, unemployed
lowest they are allowed to pay workers
are groups of employees who bargain their employers over salaries and work conditions
-want higher wages
are deliberately set above the market rate to increase productivity
is money payed by the government to people who are unemployed
Higher income taxes..
discourages people to work
Reducing income taxes might..