Econ week 3

Question 1

Impact of new ideas

Answer 1

Ideas can be freely shared
Ideas do not depreciate with use
Ideas may promote other ideas

Question 2

Institution

Answer 2

Any part of society that keeps the society together and performs a role

Question 3

Property rights

Answer 3

Control over a tangible or intangible resource

Question 4

Government stability

Answer 4

Corruption and political instability discourages investment and innovation

Question 5

Efficient regulation

Answer 5

Reg and rules are essential to a well functioning economy but they also can be inefficient or excessive

Question 6

Gov. policy

Answer 6

Creates incentives through intellectual property laws
subsidize research and development

Question 7

Working age pop

Answer 7

Those age 16 or older who are not in the military or institutionalized

Question 8

Employed

Answer 8

Working age people who are working

Question 9

Unemployed

Answer 9

Working-age people without jobs who are trying to get jobs

Question 10

Labor force

Answer 10

The employed plus the unemployed

Question 11

Not in the labor force

Answer 11

Those in the working age population who are neither employed nor unemployed

Question 12

Labor force participation rate

Answer 12

The percentage of the working age pop that is either employed or unemployed
Employed + UNemployed/ Working age pop x 100

Question 13

Unemployment rate

Answer 13

The percentage of the labor force that is unemployed

Unemployed/labor force x 100

Long term: > 6months Short term: < 10 weeks

Question 14

Equilibrium unemployment rate

Answer 14

The long run unemployment rate to which the economy tends to return

Question 15

Labor market flows

Answer 15

Labor markets are like a busy restaurant
people are constantly replacing people in the workforce

Question 16

Dynamic Labor Market

Answer 16

makes it easier for new people to enter the market and find a job quickly

Question 17

Marginally attached

Answer 17

Someone who wants a job and who has looked for a job within the past year, but who isn’t counted as unemployed because they aren’t currently searching for work.

yields slightly higher unemployment called U5

Question 18

Underemployed

Answer 18

Someone who has some work but wants more hours, or whose job isn’t adequately using their skills

yield slightly higher unemployment called U6

Question 19

Labor supply

Answer 19

workers supply their labor for a price (their wage)

Question 20

Labor demand

Answer 20

employers are the buyers of labor

Question 21

Downward sloping

Answer 21

employers demand less labor when the price of labor is high

Question 22

Upward sloping

Answer 22

Workers supply more labor when wages are high

Question 23

Frictional Unemployment

Answer 23

Unemployment due to the time it takes for employers to search for workers and for workers to search for jobs.

Question 24

Frictional Unemployment

Answer 24

Unemployment due to the time it takes for employers to search for workers and for workers to search for jobs.

Question 25

Structural unemployment

Answer 25

Unemployment that occurs because wages don’t fall to bring labor demand and supply into equilibrium

(unions, minimum wage laws, job protection regs)

Question 26

Cyclical unemployment

Answer 26

Unemployment that is due to temporary downturn in the economy

Question 27

Unions

Answer 27

Organizations that represent workers who band together to negotiate jointly

Question 28

Hysteresis

Answer 28

When a period of high unemployment leads to higher equilibrium unemployment rate

Question 29

Inflation

Answer 29

A generalized rise in the overall level of prices