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Chapter 9: Unemployment
Terms in this set (35)
In government statistics someone who currently has a job or is temporarily away from his or her job is called what?
In government statistics someone who is not currently at work, but who is available for work and has actively looked for work in the last month is called what?
Sum of employed and unemployed workers in the economy is called what?
What are the three types of unemployment?
1. Frictional Unemployment
2. Structural Unemployment
3. Cyclical Unemployment
What is short term unemployment that arises from the process of matching workers with their jobs?
What arises from persistent mismatch between the skills or attributes of worker and requirements of their jobs?
What causes unemployment from business cycle recession?
Natural rate of unemployment(NRU) combines which types of unemployment?
Frictional and Structural
Do people want the NRU to be low or high?
How do you calculate the unemployment rate?
Are discouraged workers part of the labor force?
People who are available for work, but have not looked for a job during the previous month
How do you calculate labor force participation rate?
(labor force/working age population)*100
What partially protects workers incomes when they become unemployed?
Quantity of labor supplied will be greater than the quantity of labor demanded, raising the unemployment rate, is when the minimum wage is set ____ the market wage.
Labor unions are organizations of workers that bargain with employers for what two things?
higher wages and better working conditions
What is an above market wage that a firm pays to motivate workers to be more productive?
Workers are most productive at what?
A market basket uses __ types of goods and services purchased by a typical urban family of 4.
What 3 categories take over three-quarters of the market basket?
housing, transportation, and food
Consumer price index (CPI) is the measure of the average change over time in the ___ of a typical urban family of 4 they purchase.
What are the differences between CPI and GDP inflation rate? TEST QUESTION!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
GDP includes all final goods and services, while CPI includes goods and services commonly used. This may overstate rate of inflation for CPI because when there is more demand for a good the price increases.
How is CPI calculated? What is the equation?
1. Fix the basket
2. Find the prices
3. Compute the basket's cost
4. Choose a base year and compute the index
5. Compute the inflation rate
(Basket price of G&S in current year/basket prices of G&S in base year) *100
What are the four biases that can cause an overstate in CPI inflation rate?
increase in quality bias
new product bias
What is the average of prices received by producers of goods and services at all stages of production process called?
Producer Price Index (PPI)
Inflation doesn't matter in the long run or short run?
What is a stated interest rate on a loan called?
Nominal Interest rate
How do you calculate real interest rate?
nominal interest rate - inflation rate
How fast the purchasing power of your bank account rises over time is nominal IR or real IR?
How fast the # of dollars is increasing in your bank account over time is nominal IR or real IR?
What are three ways inflation imposes costs on the economy?
1. distribution of income
2. anticipate inflation
3. unanticipated inflation
Anticipated inflation affects:
all aspects of the economy
-purchasing power of cash
-firms list prices
The costs to firms of changing prices are called
In unanticipated inflation, when inflation decreases unexpectedly, people who borrowed money at a nominal interest rate found out what about the real interest loan?
was much higher
What is monetary neutrality?
inflation doesn't matter in the long run, affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 14: Money, Banks, and the Federal Reserve…
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Chapter 10: Economic Growth
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