Chapter 6 Flashcards
Who are the unemployed?
• Individuals who don’t have a job and are actively looking for work.
Labor force.
• Employed + unemployed.
Unemployment rate.
• (unemployed / labor force) x 100.
Labor force participation rate.
• (Labor force / pop. 16 years and older) x 100. Pop excluding those in the military.
Discouraged workers.
• Left the labor force bc. they couldn’t find a job.
Marginally attached workers.
• Those who aren’t working as much as they’d like to for reasons.
Part time for economic reasons.
• Hardships for example might cause family members otherwise not in the labor force to get part time jobs.
Seasonal unemployment.
• Component of unemployment attributed to seasonal factors.
Cyclical unemployment.
• Fluctuations in real GDP that cause unemployment.
Frictional unemployment.
• Occurs as a result of normal economy behavior; normal behavior of firms waiting for qualified workers and workers looking for the best job offer.
Structural unemployment.
• A result of a mismatch of skills and jobs. This occurs for only specific parts of the economy that could occur from automation for example.
Natural rate of unemployment.
• Level of unemployment independent of cyclical unemployment; only measures frictional and structural unemployment.
Full employment.
• When unemployment is at the natural rate.
Unemployment insurance.
• People receive payments from gov’t. 70% of people did not remain on unemployment insurance longer than 6 months.
Consumer price index.
• Price index that measures the cost of a fixed basket of goods chosen to reflect the consumption pattern of a typical consumer.
How would CPI in a year be calculated?
- CPI in yr k = 100 x cost of basket in yr k / cost of basket in base year.
- Measures inflation.
Cost of living adjustments.
• Automatic increases in wages or other payments that are tied to the CPI.
Inflation rate.
• % rate of change of a price index.
Deflation.
• Negative inflation or falling prices of goods and services.
Anticipated inflation vs. unanticipated inflation.
- Anticipated inflation: inflation that is expected.
* Unanticipated inflation: inflation that is not expected; result of disasters, wars, bubbles, etc.
Menu cost.
• Costs associated with changing prices and printing new price lists (inflation).
Shoe-leather cost.
• Costs of inflation that arise from trying to reduce holdings of cash.
Hyperinflation.
• An inflation rate > 50% per month.
