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Macro > Chapter 5 - measuring the economy > Flashcards

Chapter 5 - measuring the economy Flashcards

1
Q

besides GDP, what is another way to determine how well an economy is doing?

A

unemployment rates

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2
Q

what does unemployment mean to an individual?

A

loss of income

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3
Q

when unemployment is high, what else is usually high?

A

crime rates

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4
Q

on an economic perspective, what does unemployment mean?

A

as a country we are not optimizing our resources, and losing production

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5
Q

when unemployment leads to less production, what does that mean

A

a lower gdp

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6
Q

when people are unemployed for a period of time, what do they lose? what does this mean on an economical point of view.

A

their valuable skills; not being efficient

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7
Q

how do you be counted in the labour force?

A
  • employed (part or full time)

- unemployed but actively seeking a job.

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8
Q

to be counted as unemployed (in the labour force), a person must fall into one of the three categories:

A
  • temporary layoff
  • no job but made efforts
  • has a job starting soon
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9
Q

the working age population is divided into two groups:

A

people in the labour force, and people not in the labour force

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10
Q

the labour force consists of

A

employed and unemployed workers

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11
Q

not working does not equal unemployed. T/F

A

T

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12
Q

how do you find the labour force participation rate?

A

labour force divided by working age population x100

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13
Q

how do you find unemployment rate?

A

of unemployed people divided by abour force x 100

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14
Q

to find the employment rate you…

A

divide the number of employed by working age population x100

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15
Q

to find involuntary part time rate you…

A

divide the number of involuntary part time byt the labour force x 100

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16
Q

Unemployment can be classified into three types:

A

Frictional unemployment
Structural unemployment
cyclical unemployment

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17
Q

What does frictional unemployment mean?

A

short term unemployment caused by the ordinary difficulties of matching employee to employer

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18
Q

what does structural unemployment

A

means job sectors that are are not needed in market / jobs that are removed permanently

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19
Q

give 2 example of structural unemployment?

A

autonomous truck drivers, DV sectors

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20
Q

is it a good thing when structural unemployment happens?

A

yes, because it indicates that there is an improvement of technology

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21
Q

Frictional unemployment and structural unemployment happen regardless of how well the economy is doing. T/F?

A

T

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22
Q

what does cyclical unemployment mean?

A

employment depends on the state of the economy

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23
Q

when the economy is ding well, on a cyclical employment prospective, explain what would happen to the hiring process.

A

since the economy is doing well, people are spending more on goods and services, which leads to more hiring

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24
Q

frictional and structural unemployment are signs of a __ economy

A

healthy

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25
Q

when a student graduates and starts to look for work, they are officially ___

A

unemployed

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26
Q

natural unemployment arises from what

A

frictional and structural unemployment when there is no cyclical unemployment

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27
Q

when cyclical unemployment is equal to 0, this means there is a __

A

natural unemployment

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28
Q

full employment is defined as

A

when the unemployment rate equals the natural unemployment rate

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29
Q

Unemployment creates two social problems:

A

1: loss of income from production

2. loss of human skills (or human captial)

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30
Q

differentiate between the working population and the non working population

A

working: 15 and older

non working: under 15

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31
Q

t/f full employment means everyone is employed in the economy

A

f

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32
Q

when an economy is at full employment, there is NO __ unemployment

A

cyclical unemployment

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33
Q

what is the type of GDP called when there is full employment?

A

potential GDP

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34
Q

potential GDP means what

A

when the economy is at full employment

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35
Q

potential GDP can also be known as the

A

capacity of the economy

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36
Q

the gap between the real GDP and the Potential GDP is called what?

A

output gap

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37
Q

what does price level mean?

A

is the average level of prices of goods and services and the value of money

38
Q

what does inflation mean?

A

persistently rising price level

39
Q

what does deflation mean?

A

persistently falling prices

40
Q

why would we be interested in the price level?

A
  1. measure the inflation rate and deflation rate

2. distinguish between money values and the real values of economic variables

41
Q

a one shot rise of price is considered inflation, T/F?

A

F, it must be consistent

42
Q

what happens to our purchasing power during inflation

A

it falls (less purchasing power)

43
Q

distinguish between real interest rates and nominal interest rate

A

real interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds.

nominal interest rate refers to the interest rate before taking inflation into account.

44
Q

real interest rate is denoted by

A

r

45
Q

nominal interest rate is denoted by

A

i

46
Q

when a question asks for the base years’ inflation rate, what do you say?

A

cannot be determined because we do not have the value from the previous year

47
Q

is deflation a good thing? explain why

A

-no. Because if consumers see that the prices are consistently falling they’re not going to buy anything

48
Q

what is an important thing to recognize about consumer price index?

A

it does not take into account the goods and services that consumers do not care about

49
Q

using a consumer price index perspective: out of the products: parking meters, hot dogs, tractors, and dvds. Which 2 products be cared about

A

dvds and hot dogs

50
Q

what a question asks about the cpi basket, it is referring to

A

the quantity of goods that CONSUMERS would want

51
Q

Real wage means

A

how much you actually buy with your wage

52
Q

People who are unemployed but are not actively looking for a job, are not counted in the

A

Labor force

53
Q

What does unemployment rate mean?

A

It’s a measurement of people who want a job that can find a job

54
Q

the total population is divided into the ___ and __

A

working age and others

55
Q

the working-age population is divided into

A

people in the labour force and not in the labour force

56
Q

the labour force is divided into

A

employed and non employed

57
Q

employed employees are either __ time or ___ time,

A

full time and part-time

58
Q

the employed part-time are either

A

voluntary or non-voluntary

59
Q

the labour force is the sum of

A

employed and non employed

60
Q

to be counted as employed one must

A

have a full time or part time job

61
Q

to be counted as unemployed

A

temporary layoff
actively looking for work
new job that starts in the next 4 weeks

62
Q

individuals that are in the working-age but are not employed or unemployed are not

A

counted into the labour force

63
Q

the four indicators of that state of the labour market:

A

unemployment rate
employment rate
involuntary part time rate
labour force participation rate

64
Q

the unemployment rate is defined as

A

the percentage of the people in the labour force who are unemployed

65
Q

the unemployment rate is defined as

A

the percentage of the people in the labour force who are unemployed

66
Q

what does involuntary part-time mean?

A

the people working in the labour force that want full time but are instead working part-time

67
Q

define the labour force participation rate

A

percentage of working-age members who are part of the labour force

68
Q

employment rate is defined as

A

the percentage of people of working age who have jobs

69
Q

the unemployment rate is the percentage of the people in the __ who are unemployed

A

labour force

70
Q

the labour force participation rate is the __ who are members of the labour force

A

working age population

71
Q

employers no longer needing a set of skills is also referred to as what kind of unemployment

A

structural unemployment

72
Q

when you look at a graph and there is a downward slope, what kind of unemployment would this be indicating?

A

cyclical unemployment

73
Q

frictional and structural unemployment make up what?

A

natural unemployment

74
Q

what is the natural rate of unemployment?

A

the amount of unemployment that would occur when the economy is at full employment

75
Q

does full employment require 100 percent employment?

A

nope, as long as 5 percent of the workforce is looking for a job

76
Q

which unemployment’s make up natural unemployment

A

frictional and structural unemployment

77
Q

“Robin is quitting his current job to find another that has better prospects.” is an example of what kind of unemployment?

A

frictional

78
Q

” outsourcing resulted in many jobs lost” is an example of what kind of unemployment

A

structural unemployment

79
Q

what happens to cyclical unemployment during a recession?

A

it increases unemployment

80
Q

people leave their jobs and spend time searching for another job that better suits their abilities. Does this lead to unemployment

A

yes

81
Q

a discouraged searcher

A

has stopped looking for a job because of repeated failure to find one

82
Q

The labour force participation rate is the percentage of the​ _____ who are members of the labour force.

A

working-age population

83
Q

The natural unemployment rate is the unemployment rate when the economy is​ _____.

A

full emloyment

84
Q

full employment means

A

all who are able and willing to work are employed.

85
Q

Full employment is when there is no​ _____ unemployment​ or, equivalently, when all the unemployment is​ _____ or​ _____.

A

cyclical; frictional; structural

86
Q

The output gap is real GDP minus​ _____ expressed as a percentage of​ _____.

A

potential​ GDP; potential GDP

87
Q

The natural unemployment rate is the unemployment rate when the economy is​ _____.

A

at full employment

88
Q

The price level is the​ _____.

A

average level of prices

89
Q

The inflation rate is the percentage change in the​ _____ from one year to the next.
Deflation is a situation in which the​ _____ is​ _____ and the inflation rate is​ _____.

A

price​ level;

price​ level; falling; negative

90
Q

The Consumer Price Index is a measure of the​ _____ of the prices paid by​ _____ consumers for a fixed market basket of consumption goods and services.

A

average; urban

91
Q

what does gdp deflator mean?

A

the GDP price deflator shows how much a change in GDP relies on changes in the price level.

Macro (6 decks)

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