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Econ 203 Chapter 8
Terms in this set (31)
the increase in the value of all goods and services produced and consumed in an economy across time
the swings of the growth rate across time
a downturn in economic activity; usually at least two quarters long
a prolonged and severe recession
when economic activity is increasing and output is growing
the peak of the business cycle
the average value of growth across time that the actual growth is cycling around
civilian labor force
people over the age of 16, who are working or actively seeking a job
people NOT in the labor force
people not active is seeking a job
labor force participation rate
percentage of people over 16 that are actively working or seeking work compared to the total population
the percentage of employed people as part of the total population
someone over the age of 16 who meets one of the following criteria: 1) if they worked for even 1 hour during the week; 2) if they worked for 15 or more unpaid hours in a family enterprise; or 3) if they have a job but did not work due to illness, vacation, disputes, weather, time off, or personal reasons
someone who is actively seeking a job but do not have one right now and are waiting to begin or return to work; must meet the following three criteria: 1) does not have a job, 2) is available for work, and 3) has been actively looking for a job in the past month
"actively looking for a job"
1. registering at an employment office
2. meeting with employers
3. checking with friends and relatives
4. placing or answering ads
5. writing applications
6. being in a union or a professional register
the percentage of unemployed people in the labor force (people unemployed divided by the labor force)
reasons for unemployment
1. information is scarce
2. people are free to choose
3. new products and technology
4. people are leaving and returning to the labor force
5. people are quitting their jobs
3 types of unemployment
unemployment due to constant changes in the economy that prevent qualified unemployed workers from being immediately matched up with existing job openings
what causes frictional unemployment?
imperfect information and miscommunication
workers don't immediately know about every single job offering available, and employers do not know about every single prospect employee
which type of unemployment is the least worrisome?
unemployment due to characteristics of the economy that make it difficult for job seekers to find employment and for employers to hire workers; although many job offerings are available, they generally require skills many unemployed workers do not have
unemployment due to recessionary business conditions and inadequate labor demand
which type of unemployment is usually the longest and worst type?
the level of unemployment that arises from the efficient use of the labor force, taking into account the natural level of unemployment due to information costs, dynamic changes, and the structural conditions of the economy
natural level of unemployment
the level of unemployment when frictional and structural conditions in the labor market are accounted for, when the economy is producing at a stable level of output.
an increase in the price level that was not anticipated by most decision makers
Why would we not want 100% employment?
Workers would not be able to select better-suited matches. SOME mobility and flexibility (job shopping) results in a more efficient job market and more efficient overall production.
factors that affect frictional unemployment
1. job search technology improvements
2. labor mobility
3. unemployment benefits
what the economy could produce in the long run given full and efficient use of its resources
Under the expenditure method, what is the by far largest component of GDP?
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