Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
60 Cards in this Set
- Front
- Back
|
working age population
|
the total number of people age 16 and older who are not in jail, hospital, or some other institutional care or in the U.S. armed forces
|
|
|
Labor Force
|
the number of people employed plus the number of people unemployed
|
|
|
Two main labor market indicators
|
The unemployment rate
the labor force participation rate |
|
|
the unemployment rate
|
=(# of people unemployed)/(labor force) x100
|
|
|
Labor force participation rate
|
=(labor force)/(working age population) x100
|
|
|
Marginally attached workers
|
a person who doesn't have a job and wiling to work, has not made specific efforts to find a job within the previous four weeks, but has looked for work sometime in the recent past
|
|
|
discouraged worker
|
a marginally attached worker who has not made specific efforts to find a job within the previous four weeks because unsuccessful attempts to find a job were discouraging
|
|
|
Frictional Unemployment
|
the unemployment that arises from people entering and leaving the labor force, from quitting jobs to find better ones, and from the ongoing creation and destruction of jobs from normal labor turnover
|
|
|
Structural Unemployment
|
the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs
|
|
|
Cyclical unemployment
|
the fluctuating unemployment over the business cycle that increases during a recession and decreases during an expansion
|
|
|
natural unemployment
|
the unemployment rate when the economy is at full employment
|
|
|
full employment
|
when there is no cyclical unemployment or, equivalently, when all the unemployment is frictional or structural
|
|
|
the natural unemployment rate is influenced by:
|
the age distribution of the population
the pace of structural change the real wage rate unemployment benefits |
|
|
The Real Wage Rate
|
anything that raises the real wage rate above the meet equilibrium level creates a surplus of labor and increases the natural unemployment rate
|
|
|
Potential GDP
|
The value of real GDP when the economy is at full employment--all the economy's factors of production (labor, capital, land, and entrepreneurial ability) are unemployed
|
|
|
output gap
|
Real GDP - potential GDP(expressed as a percentage of potential GDP)
|
|
|
Consumer Price Index
|
a measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services
|
|
|
Reference Base Period
|
a period for which the CPI is defined to equal 100.
|
|
|
Inflation rate
|
the percentage change in the price level form one year to the next
|
|
|
deflation
|
a situation in which the price level is falling and the inflation rate is negative
|
|
|
cost of living index
|
a measure of the change in the amount of money that people need to spend to achieve a given standard of living
|
|
|
Sources of Bias in the CPI
|
-New goods Bias
-Quality Change Bias -Commodity Substitution Bias -Outlet substitution Bias |
|
|
Two consequences of the CPI Bias
|
Distortion of private contracts
increases in government outlays and decreases in taxes |
|
|
GDP Price Index
|
An average of the current prices of all the goods and services included in GDP expressed as a percentage of base-year prices
|
|
|
Personal Consumption Expenditures Price Index
|
PCE; an average of the current prices of the goods and services included in the consumption expenditure component of GDP expressed as a percentage of base-year prices
|
|
|
Core inflation rate
|
the annual percentage change in the PCE price index excluding the prices of food and energy
|
|
|
Nominal wage rate
|
the average hourly wage rate measured in current dollars
|
|
|
real wage rate
|
the average hourly wage rate measured in the dollars of a given reference base year
|
|
|
nominal interest rate
|
the dollar amount of interest expressed as a percentage of the amount loaned
|
|
|
Real interest rate
|
the goods and services forgone in interest expressed as a percentage of the amount loaned and calculated as the nominal interest rate minus the inflation rate
|
|
|
Classical macroeconomics
|
the view that the market economy works well, that aggregate fluctuations are a natural consequence of an expanding economy, and that government intervention cannot improve the efficiency of the market economy
|
|
|
Keynesian Macroeconomics
|
the view that the market economy is inherently unstable and needs active government intervention to achieve full employment and sustained economic growth
|
|
|
Monetarist Macroeconomics
|
The view that the market economy works well, that aggregate fluctuations are natural consequence of an expanding economy, but that fluctuations in the quantity of money generate the business cycle
|
|
|
Production Function
|
a relationship that shows the maximum quantity of real GDP that can be produced as the quantity of labor employed changes and all other influences on production remain the same
|
|
|
Diminishing Returns
|
the tendency for each additional hour of labor employed to produce a successively smaller additional amount of real GDP
|
|
|
Quantity of Labor Demanded
|
The total labor hours that all the firms in the economy plan to hire during a given time period at a given real wage rate
|
|
|
Demand for Labor
|
the relationship between the quantity of labor demanded and the real wage rate when all other influences on firms' hiring plans remain the same
|
|
|
Quantity of Labor Supplied
|
The number of labor hours that all the households in the economy plan to work during a given time period at a given real wage rate
|
|
|
Supply of labor
|
the relationship between the quantity of labor supplied and the real wage rate when all other influences on work plans remain the same
|
|
|
The amount of Job Search depends on:
|
Demographic Change
Unemployment Benefit Structural Change |
|
|
Job Rationing
|
a situation that arises when the real wage rate is above the full-employment equilibrium level
|
|
|
Job Rationing occurs because:
|
Efficiency wage
minimum wage union wage |
|
|
Efficiency wage
|
a real wage rate that is set above the full-employment wage rate to induce greater work effort
|
|
|
Union wage
|
A wage rate that results form collective bargaining between a labor union and a firm
|
|
|
Economic Growth
|
a sustained expansion of production possibilities
|
|
|
Economic Growth Rate
|
The annual percentage change of real GDP
|
|
|
Growth rate of real GDP=
|
(real GDP in current year)-(real GDP in previous year
____________________________________________________ x100 (real GDP in previous year) |
|
|
Real GDP per person
|
real GDP/the population
|
|
|
rule of 70
|
the number of years it takes for the level of any variable to double is approximately 70 divided by the annual percentage growth rate of the variable
|
|
|
Labor Productivity
|
the quantity of real GDP produced by one hour of labor
|
|
|
Labor Productivity=
|
Real GDP/ Aggregate Hours
|
|
|
Influences to labor productivity
|
-savings and investment in physical capital
-expansion of human capital and discovery of new techonologies |
|
|
Law of Diminishing Marginal Returns
|
If the quantity of capital is small, an increases in capital brings a large increase in production; and if the quantity of capital is large, and increase in capital brings a small increase in production
|
|
|
Productivity Curve
|
the relationship that shows how real GDP per hour of labor changes as the quantity of capital per hour of labor changes
|
|
|
Expansion of Human Capital Comes from
|
-education training
-job experience -health and diet |
|
|
Classical Growth theory
|
the theory that the clash between an exploding population and limited resource will eventually bring economic growth to an end
|
|
|
Malthusian Theory
|
another name for classical growth theory-named for Thomas Robert Malthus
|
|
|
New Growth Theory
|
The theory that our unlimited wants will lead us to ever greater productivity and perpetual economic growth
|
|
|
Economic Freedom
|
A condition in which people are able to make personal choices, their private property is protected by the rule of law, and they are free to buy and sell in markets
|
|
|
Property Rights
|
the social arrangements that govern the protection of private property
|
