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32 Cards in this Set
- Front
- Back
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What are some of the costs of unemployment?
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-not providing for your family
-psychological cost of unemployment |
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Labor Force
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E+U consists of the people in the adult population who are either working or looking for work
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Unemployed
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the people who are actively seeking a job
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Unemployment Rate
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% of the labor force not currently working, but actively seeking work
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UR Formula
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#persons unemployed / # persons in labor force
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Labor Force Participation Rate
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% of the population working in economy
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LFPR Formula
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# persons in labor force/ # persons in adult population
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Frictional Unemployment
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the time required to bring job seekers together with employers
-when employers look through a set of applicants |
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Seasonal Unemployment
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unemployment caused by seasonal changes in labor demand
-Santa Clause, Construction Workers |
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Structural Unemployment
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occurs because changes in tastes technology, taxes, and competition reduce the demand for certain skills and increase the demand for other skills
-they usually stay put -Federal Retraining Programs |
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Cyclical Unemployment
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increase during recessions and decreases during expansions
-firms reduce demand for labor -Government starts programs to shift the agg demand curve to the right |
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Full Employment
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is the employment level that exists when there is NO CYCLICAL unemployment
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Unemployment Compensation
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- can receive benefits for up to 6 months if they are actively looking for a job
- can be longer if the economy is in a recession -covers 40% of there take home pay -promotes higher quality job search |
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International Comparisons of Unemp
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Europe- it is alot longer, has laws that prevent firms to lay off people
-UR is higher than the U.S. Japan- high job security or you have your job for life |
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Discouraged Workers
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workers who have looked for jobs for a while and cannot find any jobs so they quit looking
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Underemployed
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people who are overqualified for there job
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Inflation
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is the increase in the price level in the economy
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Hyperflation
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when inflation increases greatly
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Deflation
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a decrease in average price level
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Disinflation
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reduction in the rate of inflation
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Demand Pull inflation
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inflation caused by increase in aggregate demand
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Cost-Push Inflation
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decrease in the agg supply causing inflation to increase
-stagflation |
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Transactions Costs of Variable Inflation
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inflation is unpredictable
-Exchange rate can affect transaction |
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How are Relative Price Changes affected?
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some prices of products are not represented correctly in inflation
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Metropolitan Areas
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local housing market effects it
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International Comparisons of Inflation
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only a few items are sampled in developing countries
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Interest
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is the dollar amount paid by borrowers to lenders
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Interest Rate
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is the amount paid per year as a % of the amount borrowed
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Loanable funds
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the amount of people willing to lend
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Nominal Interest Rate
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measures interest in terms of the current dollars paid
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Real Interest Rate
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Equals the nominal rate- inflation rate
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Why is inflation unpopular?
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-Retired people with fixed incomes are not adjusted for inflation
-decreases there purchasing power |
