D Describe Types of Unemployment and Measures of Unemployment

Question 1

Unemployment (Frictional, structural, cyclical)

Answer 1

Frictional - issues in matching. Doesn’t go away

Structural - Long run changes in the economy

Cyclical - +when GDP operates at less than full capacity, - when expansion leads to employment temp. above full emp. level

Question 2

Unemployed

Answer 2

Not working, actively searching for work

Question 3

Unemployment Rate (lagging indicator because of discouraged workers who enter LF more than they’re hired at expansion)(also lags because firms are slow to hire or lay off workers at business cycle turning points)

Answer 3

%people in labor force(all ppl employed or unemployed) who are unemployed

Voluntarily unemployed: Choose not to be in labor force

Question 4

Underemployed

Answer 4

Works part, prefers full

Makes less, could make more

Question 5

Participation Ratio; activity ratio; LFPR

Answer 5

% of working age pop who are either employed or actively seeking employment

Question 6

Discouraged Workers

Answer 6

Cause short-term flux in LFPR: They’re available for work but neither employed nor looking for employment.

Make unemp. a lagging indicator, so refer to number of employees on payrolls, too.

Question 7

Productivity(output per hour worked)

Answer 7

Prod. declines early in contractions, increases early in expansions