Business Cycle and Unemployment Revision Flashcards
What is the business cycle?
natural rise and fall of economic growth that occurs over time, consisting of phases such as expansion, peak, contraction, and trough.
What are indicators of macroeconomic activity?
Indicators include GDP growth rates, unemployment rates, inflation rates, and other economic statistics that reflect the overall health of an economy.
How have recent events impacted the business cycle in Australia over the last five years?
Recent events include the COVID-19 pandemic, which caused a significant recession, followed by a period of recovery with fluctuating economic activity due to various global and domestic factors.
What is the Non-Accelerating Inflation Rate of Unemployment (NAIRU)?
NAIRU is the unemployment rate at which inflation remains stable; it represents the balance between unemployment and inflation where neither is accelerating.
What is full employment?
Full employment is the situation where all available labor resources are being used efficiently, and the unemployment rate is at its natural level, including frictional and structural unemployment.
What is the participation rate?
percentage of the working-age population that is either employed or actively seeking employment.
What is underemployment?
Underemployment occurs when workers are employed part-time but wish to work more hours
How is unemployment measured?
ABS DOES SURVERY EVERY MONTH
What are the effects of unemployment, including the GDP Gap?
Unemployment can lead to a lower standard of living, reduced business revenues, and a GDP gap, which is the difference between actual and potential GDP, indicating underutilized resources.
What is the Phillips Curve?
The Phillips Curve shows the inverse relationship between unemployment and inflation; as unemployment decreases, inflation tends to increase, and vice versa.
What are the causes and types of unemployment?
Cyclical Unemployment: Caused by economic downturns or recessions.
Structural Unemployment: Resulting from a mismatch between skills and job requirements.
Frictional Unemployment: Due to transitions between jobs or entering the labor force.
How have trends in unemployment in Australia changed over the last five years?
Trends have fluctuated due to various factors, including the COVID-19 pandemic, economic recovery, and shifts in labor market conditions. Unemployment rates have varied as Australia moved through different stages of economic activity.
