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Macroeconomics > Class Chapt 7 > Flashcards

Class Chapt 7 Flashcards

1
Q

Why unemployment is a problem?

A
  • Lost incomes and production
  • Lost human capital
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2
Q

Which is working-age population?

A

the total number of people aged 15 years and over

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3
Q

How does the working-age population is divided?

A
  1. People in the labour force
  2. People not in the labour force
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4
Q

who is considered unemployed?

A
  1. On temporary layoff
  2. Without work but searching for a job within the previous 4 weeks
  3. Has a new job to start within four weeks.
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5
Q

What are the 4 Labour Market Indicators?

A
  1. The unemployment rate
  2. Involuntary part-time rate
  3. The labour force participation rate
  4. The employment rate
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6
Q

How to calculate unemployment rate?

A

(Number of people unemployed ÷ labour force) *100.

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7
Q

In a recession, unemployment increases or decreases?

A

Increases

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8
Q

How to calculate the involuntary part-time rate is?

A

(Number of involuntary part-time workers ÷ Labour force) *100

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9
Q

How to calculate the labour force participation rate?

A

(Labour force ÷ Working-age population) × 100.

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10
Q

What is the Labour force participation rate?

A

is the percentage of the working-age population who are members of the labour force

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11
Q

What is the employment rate?

A

is the percentage of the working-age population who have jobs.

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12
Q

How to calculate the employment rate?

A

(Employment ÷ Working-age population) *100.

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13
Q

Why does the labour force participation increased a lot before 1990?

A

Because women participated in the labour force.

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14
Q

Who is not included in the unemployment rate?

A

1.Discouraged searchers
2.Long-term future starts
3. involuntary part-timers

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15
Q

How can Unemployment be classified?

A
  • Frictional unemployment (good)
  • Structural unemployment (necessary)
  • Cyclical unemployment (not good)
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16
Q

What is frictional unemployment?

A

it appears by the creation and destruction of jobs, it is permanent and healthy.

17
Q

How does structural unemployment happens?

A

With changes that require different skills needed to perform jobs.

18
Q

What is full employment?

A

when there is no cyclical unemployment, only frictional and structural.
unemployment = Natural employment

19
Q

What is potential GDP

A

is the quantity of real GDP produced at full employment.

20
Q

what is the output gap?

A

Real GDP minus potential GDP

21
Q

Why is unpredictable inflation or deflation bad?

A

-Redistributes income and wealth
-Lowers real GDP and employment
-Diverts resources from production

22
Q

What does CPI stands for?

A

Consumer Price Index

23
Q

What is the Consumer Price Index?

A

Measures the average price paid by urban consumers for certain goods and services. to know the cost of living now compared to the past.

24
Q

What is the 3 largest components in the basket?

A

1.Shelter
2.Transportation
3.Food and beverage

25
Q

How does the CPI is calculated?

A

Cost of basket at current-period prices ÷ Cost of basket at base-period prices) * 100 (the result minus 100)

26
Q

What is the Inflation rate?

A

is the percentage change in the price level from one year to the next.

27
Q

How does the Inflation rate is calculated?

A

[(CPI this year − CPI last year) ÷ CPI last year] * 100

28
Q

4 reasons for the CPI bias?

A

-New goods bias
-Quality change bias
-Commodity substitution bias
-Outlet substitution bias

29
Q

What are the alternatives for measuring prices?

A

-GDP deflator
-Chained price index for consumtion (CPIP)

30
Q

How to get the GDP deflator?

A

(Nominal GDP ÷ Real GDP)* 100

31
Q

The labour force is the total number of ?

A

A) people employed.
B) people aged 15 years and over.
C) people in the working-age population who are employed.
D) people in the working-age population who are either employed or unemployed

32
Q

Give an example of cyclical unemployment

A

A person that has been laid off but expects to be called back in a few weeks, just as soon as the economy improves.

33
Q

What happens When real GDP is above potential GDP?

A

there is less than normal frictional, structural, and seasonal unemployment.

34
Q

A positive inflation rate means that average prices in the economy are?

A

Rising

35
Q

The basket used to calculate the Consumer Price Index (CPI) assumes that over time consumers?

A

Buy the same quantities of products no matter how prices change.

36
Q

Inflation formula:

A

(CPI now - CPI Past / CPI past) *100

Macroeconomics (6 decks)

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