Econ 1

Question 1

*Refers to the condition and extent of joblessness within
an economy

Answer 1

Unemployment

Question 2

*“A person is unemployed if he or she is not working and
(1) has made specific efforts to find a job during the last
four weeks, (2) is laid off from a job in the succeeding
months.”

Answer 2

-Samuelson & Nordhaus, 2004

Question 3

Causes of Unemployment

Answer 3

*A person might be a new graduate or new entrant into the
labor force
*A person who quit a job in search for other employment may be
considered as unemployed while he/she is searching
*A person may be laid off from work
*A worker may lose his/her job by being fired or because the
company closes down

Question 4

TYPES OF UNEMPLOYMENT

Answer 4

Frictional
Cyclical
Structural
Seasonal
Social Impact

Question 5

*Transitional type of unemployment which happens when people move from one job to another
*Arises because of the incessant movement of people
between regions and jobs or through different stages of
the life cycle
*A result of temporary transitions made by workers and
employers or from workers and employers having
inconsistent information about the job they applied and
hired to

Answer 5

Frictional

Question 6

*Results from the ups and downs of business cycle of the
country
*Exists when the overall demand for labor is low

*Also occurs when there is a recession in the economy

Answer 6

Cyclical

Question 7

*Results from the mismatch between the available skill and
the requirements in the labor market

Answer 7

Structural

Question 8

*Results from seasonable changes in the labor supply

Answer 8

Seasonal

Question 9

*An unemployed individual experiences psychological
deterioration due to anxiety and worry of not being able
to find work and provide financial support to his family

*Psychological deterioration can also lead to social
deterioration

Answer 9

Social Impact

Question 10

Types of Inflation

Answer 10

Cost Push Inflation
Demand Pull Inflation

Question 11

o The rise in prices resulting from increases in the cost of
production without corresponding increases in output.

o May also be caused by a shortage in supply due to natural
calamities and disasters leading to higher prices

Answer 11

Cost Push Inflation

Question 12

o Caused by higher demand compared relative to the
supply of goods and services.

o The increase in the demand for goods and services would
lead to increased prices, assuming the supply of goods
and services is not able to adjust quickly enough to meet
the higher demand

Answer 12

Demand Pull Inflation

Question 13

Costs of Inflation

Answer 13

Shoe Leather Costs
Menu Costs

Question 14

*Costs to households and business firms when making more
trips to the banks to avoid holding significant amounts in pesos
or of shifting funds from interest bearing assets into money.

Answer 14

Shoe Leather Cost

Question 15

These are cost due to changing prices.

Answer 15

Menu cost

Question 16

Costs of Inflation

Answer 16

• The BSP monitors movements in prices, analyzes their causes and undertakes necessary measures to ensure that money supply is managed in a manner that does not contribute to inflation
• Not all inflation should be addressed by monetary policy
• Reduction in the reserve requirement influences the cost of money
• Improving public access to banking system facilities would encourage savings and investments