Exam 2 (green) Flashcards
Business cycle
Today Everyone Pays Collections
Trough, expansion, peak, contraction
Rule of thumb to what constitutes a recession
When real GDP declines for 2 consecutive quarters
When did the last recession BEGIN?
December 2007
When did the last recession END?
June 2009
What was the unemployment rate last month: US? Wisconsin?
US: 4.8%
WI: 4%
Current Population Survey (CPS)
A monthly surgery of approximately 60,000 households
Ineligible population
Less than 16 yo, military, prisoners, mental hospital patients
Employed
At least 16 yo and worked at least 1 hour last week
Unemployed
At least 16 yo, not employed, actively searched within last 4 weeks
Not in the Labor Force
Over 16 yo, not institutionalized, not officially employed or unemployed
Discouraged workers
Actively searched for a job, but stopped more than 4 weeks ago.
Phantom unemployed
People actively seeking a job, with little or no intention of finding one
Four basic types of unemployment
Frictional, seasonal, cyclical, structural
Frictional Unemployment
People with the skills have not found a good match
Full employment
No cyclical unemployment
Natural rate of unemployment
The unemployment rate when the economy is at full employment
What 2 conditions must be met for the economy to be at “full employment?”
Frictional and structural
Inflation
An increase in the overall level of prices in the economy
Deflation
An decrease in the overall level of prices in the economy
Is deflation always a good thing?
Supply deflation, but not demand deflation
Consumer Price Index (CPI)
Weighted average of the prices of 84,000 g/s purchased by urban households
Demand-pull inflation
Increase in overall prices due to too much money in public’s hands
Cost-push inflation
Inflation due to costs of inputs rise faster than productivity
Expectations inflation
When people think prices go up, they buy today b/c they think it will rise tomorrow
Stagflation
When the economy is still and facing high inflation at the same time
Hyperinflation
Extremely high inflation
Seasonal Unemployment
Occurs every year at the same time
Cyclical Unemployment
When the economy is bad or in a recession
Structural Unemployment
People do not have up to date skills or location mismatch
