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Macroeconomics > Exam #2 Review (Chapters 20, 21) > Flashcards

Exam #2 Review (Chapters 20, 21) Flashcards

1
Q

current unemployment rate

A

7.9%

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2
Q

natural rate of employment

A

5-6%

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3
Q

4 kinds of unemployment

A
  1. season
  2. frictional
  3. structural
  4. cyclical
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4
Q

seasonal unemployment

A

certain profession’s demand for labor is seasonal

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5
Q

frictional unemployment

A

some people are looking for jobs and some firms are looking for peole
-in fluid markets, matching workers with jobs takes time

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6
Q

structural employment

A

a mismatch between workers and the skills/requirements for the jobs
-as the economy changes, we produce different goods and services which means we will have demand for different labor

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7
Q

cyclical unemployment

A
  • unemployment caused by recession

- simply too few jobs around

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8
Q

how much of unemployment rate can be attested to natural rate of unemployment? (seasonal, frictional, structural)

A

5-6%

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9
Q

how much of unemployment can be attested to demand related? (cyclical)

A

2-3%

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10
Q

who calculates the rate of unemployment?

A

Bureau of Labor Statistics

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11
Q

According to BLS, who is part of the labor force?

A

Those who have looked for a job in the past four weeks, those employed

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12
Q

Who is not in labor force?

A
  1. housewife
  2. retired
  3. not looking
  4. looked for work 6 weeks ago, but not in past 4 weeks
  5. gave up looking two months ago
  6. doing odd jobs for cash
  7. under 16 years old
  8. full time students
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13
Q

How many Americans are currently employed?

A

143.3 million people employed

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14
Q

how many Americans have looked for work in the past four weeks?

A

12.3 million people

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15
Q

how many are not in the labor force?

A

89 million

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16
Q

Marginally Attached worker

A

have looked for work in the past year, but not in the past 4 weeks

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17
Q

discouraged workers

A

a subset of marginally attached

-gave up looking because they believe there are no jobs

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18
Q

working part time for economic reasons

A

you want a full-time job, all you can find is a part time job
-technically counted as employed

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19
Q

U6 Unemployment Formula

A

(Unemployed + marginally attached + part time for economic reasons) / (labor force + marginally attached)

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20
Q

Labor Force Participation Rate

A

of people who could be in the labor force, how many are in the labor force?

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21
Q

who isn’t counted as a part of the labor force participation rate?

A
  • 16 and under
  • in hospital or prison
  • military
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22
Q

what is the current labor force participant rate for America?

A

63.6%

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23
Q

What do efficiency wages have to do with unemployment?

A
  • wages paid exceed the going market wage
  • this can technically create less jobs
  • however, some argue that this keeps workers productive
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24
Q

Labor Unions and Unemployment

A
  • union wages are above market equilibrium, and therefore, create labor surplus
  • however, labor members have dropped significantly since 1950
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25
Q

minimum wages and Unemployment

A

-supposedly above the market equilibrium wage
-however, it is likely that the wage out there is higher than the minimum wage
-

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26
Q

unemployment insurance and unemployment

A

-we pay people not to work
-however, this allows people to find jobs suitable to their degree and it allows them to continue to buy goods (boosting economy)
-

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27
Q

inflation

A

continual rise in the overall price level

28
Q

deflation

A

continual fall in the price level

29
Q

two ways to measure inflation

A
  1. GDP Deflator

2. Consumer Price Index

30
Q

GDP Deflator

A
  • measures how GDP has grown from time to time

- however, it may not represent the price changes the average person experiences

31
Q

Consumer Price Index

A
  • released monthly

- measures how common goods prices change over time

32
Q

who calculates the CPI?

A

BLS

33
Q

Market Basket

A

set of goods and services that the CPI examines

34
Q

Breakdown of Food and Beverage, Transportaion, and Housing by percentage according to Market basket

A

Housing (42%)
Transportation (17%)
Food and Beverage (15%)

35
Q

what is the current base year for CPI?

A

1983

36
Q

how much has CPI increased in the past year? how about past month?

A
  1. 7% in past year

- 0 in past month

37
Q

whats the current value of CPI?

A

230

38
Q

what is not included in CPI?

A

ONLINE GOODS

39
Q

Billion Prices Project

A

project by MIT economist to track inflation of online goods

40
Q

quality bias

A

over time, most products included in the CPI imporve in quality
-increases in the price of these things partly reflect the increased quality

41
Q

substitution bias

A

consumers are likely to buy fewer of those products that increase most in price and more of those products that increase last in price

42
Q

new product bias

A

new products introduced byeween updates of market basket were not included in the market basket

43
Q

outlet bias

A

manh consumers have begun to increase their purchases from discount stores
-because BLS continued to collect price statistics from traditional full price retial stores, the CPI did not reflect the prices some consumers actually paid

44
Q

nominal interest rate

A

stated rate of interest on a loan or financial asset

45
Q

what is the current mortgage loan itnerest rate?

A

5.7%

46
Q

what is the current US Treasury Bond interest rate?

A

2.1% annually

47
Q

real interest rate

A

nominal rate minus inflation rate

48
Q

REAL rate on mortgage loan

A

5.7%-1.7% or 4%

49
Q

Real rate on your US Saving Bond

A

2.1%-1.7% OR .4%

50
Q

nominal wages

A

what you get paid

51
Q

real wages

A

real wages are adjusted for inflation

52
Q

Long run economic growth

A

rising productivity, increases in standard of living

53
Q

what are the three things that make a country’s GDP grow?

A

natural resources, labor supply, labor productivity

54
Q

labor productivity

A

amount of output that can be produced by one worker, or one unit of labor

55
Q

what is the key to growth?

A

capital is key to growth

56
Q

demand for loanable funds

A

companies borrow money to purchase capital, when they borrow they pay an interest rate

57
Q

when interest rates are high, there is _______ for loanable funds

A

less demand

58
Q

when interest rates are lower, there is ______ for loanable funds

A

more demand

59
Q

supply of loanable funds

A

money being borrowed

60
Q

What are the four parts of the business cycle?

A
  1. expansion
  2. peak
  3. downturn
  4. trough
61
Q

who decides where we are in the business cycle?

A

National Bureau of Economic Research

62
Q

during a business cycle, unemployment will _________ during the recession and continue to _______ into the expansion

A

increase, increase

63
Q

can unemployment rise during expansion?

A

YES

64
Q

During a business cycle, ________ goods are much more effected than __________ goods

A

durable, nondurable

65
Q

when we are shrinking, ______ goods production goes down

A

durable goods

66
Q

when we are raising, ________ goods go up

A

durable goods

67
Q

during the recession portion of the business cycle, inflation rate will ____________

A

decline

-but this is NOT the same thing as prices declining

Macroeconomics (11 decks)

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