Chapter 5 Flashcards
The working population includes…
Employed and unemployed people
True or false.
The working age population the number of people aged 15 and over
True
How to calculate the unemployment rate?
umemployed/ labour force x 100
How to calculate the involuntary-part time Rate?
number of involuntary worker/ labour force x 100
How to calculate the labour force rate?
labour force/ working age population rate x 100
How to calculate the employment rate?
employment/ working age population x 100
How many types does unemployment have?
3 types
What are the 3 types of unemployment?
Frictional: arises from normal labour market turnover, job creation and labour force
Structural: created by changes in tech and foreign competition that change the skills needed
Cyclical: due to business cycle movements
“Natrual unemployment” is…
when there is both structural and frictional changes and there is no cyclical unemployment
Full employment is…
unemployment rate = natural unemployment rate
Output Gap is…
Real GDP minus Potential GDP
Price level is…
the average level of prices and the value of money
CPI is calculated using the formula…
Cost of current + Cost of Base x 100
Inflation equals…
(CPI this year - CPI last year)/ CPI last year x 100
New good bias…
new goods that were not avaliable in the base year appear, if they are more expensive than the goods they replace, they put an upward into CPI
Quality change bias…
Quality improvements occur every year. Part of the rise in price is payment for improved quality and is not inflation
Commodity substituion bias…
the market basket of goods used in calculating the CPI is fixed and does not take into account consumers substitutions away from goods whose relative prices increase
Outlet substitution bias…
people switch to buying from cheaper sources but the CPI as measure does not take into account of this
GDP Deflator…
Nomial GDP/ Real GDP x 100
True or False.
As more people enter the labour force the participation rate rises and so does unemployment
True
Calculate the real price of an item
Current price/ CPI x 100
When the UR greater than the NUR the ouput gap is…
Neagtive
When the UR is less than the NUR the ouptgap is…
Positive
