|
Household survey |
Interviews households and measures the unemployment rate |
|
Establishment survey |
interviews businesses and measures the employment rate. (Many economists like to use this because it is determined by actual payroll records other than unverified answers) |
|
Labor force participating rate |
is the percentage of the working age population in the labor force |
|
Unemployment rate |
shows the percentage of the labor force that is considered unemployed |
|
How would it affect the unemployment rate if the Bureau of Labor statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full time? |
The unemployment rate would increase |
|
3 types of unemployment are |
frictional, structural, and cyclical unemployment |
|
structural unemployment |
are most likely to result in hardship for the people who are unemployed because this type of unemployment requires retraining to acquire new job skills. |
|
Relationship between frictional unemployment and job search |
People are said to be frictionally unemployed when they are between jobs and searching for new jobs |
|
The natural rate of unemployment is… |
the sum of structural unemployment and frictional unemployment |
|
When the economy is at full employment, unemployment is equal to |
the natural rate of unemployment |
|
Frictionally unemployed |
A person who is in between jobs but actively engaged in job search |
|
Structurally unemployed |
Experts in hand-drawn animation who remain unemployed due to the film industry’s switch to computer-generated animation |
|
Cyclically unemployed |
When a company reduces production and employment during economic recession, and employees lose their jobs |
|
cyclically unemployed |
Ex: When the economy enters into a recession and that, a person loses his job as a delivery truck mechanic and remains unemployed. When the economy recovers, his previous employer rehires him. |
|
Full employment |
The unemployment rate is greater than zero, all remaining unemployment is either frictional or structural, and the natural rate of unemployment prevails. |
|
As output (GDP) is increasing….. |
the amount of cyclical unemployment would decrease. |
|
minimum wage law |
Has only a small effect on the unemployment rate since only a small part of the labor force earns the minimum wage |
|
Effect of labor unions on overall unemployment is… |
small only a small percentage of the labor force outside the government is unionized. |
|
An efficiency wage… |
increases the unemployment rate since firms pay a higher-than-market wage that increases the quantity of labor supplied |
|
Substitution bias |
Calculating the consumer price index for the year, the BLS uses the quantities in the market basket, rather than the quantities purchased during the current year. |
|
Nominal interest rate |
is the stated interest rate |
|
Real Interest rate |
is the nominal interest rate minus the inflation rate |
|
The chapter explains that it is impossible to know whether a particular nominal interest rate is "high" or "low" because… |
it all depends on the inflation rate |
|
If the economy is experiencing deflation, |
the nominal interest rate will be lower than the real interest rate |
|
Inflation can affect the distribution of income because…. |
people with incomes rising faster than the rate of inflation enjoy an increasing purchasing power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power. |
|
Menu costs |
the costs of firms of changing prices. (the internet has reduced the size of menu costs) |
|
Suppose that the inflation rate turns out to be much higher than most people expected. In that case, |
a borrower will gain from the situation while a lender will lose. |
|
During the late nineteenth century in the United States, many farmers borrowed heavily to buy land. During most of the period between 1870 and mid-1890s, the United States experienced mild deflation. Many farmers engaged in political protests during these years, and deflation was often a subject of their protest… |
During deflationary periods, the real interest rate exceeds the nominal interest rate, and the real cost of borrowing increases. |
|
Unemployment rate |
(Number of Unemployed / Labor force) x 100 |
|
Labor force participation rate |
(Labor force / Working – age population) x 100 |
|
Consumer Price Index |
An average of the price of the goods and services purchased by the typical urban family of four. (Cost of the market basket in the current year / Cost of the market basket in the base year x 100) |
Share This
Flashcard
