Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics > Inflation and full employment > Flashcards

Inflation and full employment Flashcards

1
Q

if full employment in not reached

A

nations human resources are not fully utilised, economy forgoes part of its output, income and living standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

NAIRU

A

natural rate of unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

the business cycle demonstrates

A

cyclical unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

cyclical rate of unemployment is

A

demand side conditions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

NAIRU is

A

supply side reliant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

why is 0% unemployment bad

A

-too much inflation
-increase production costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

functional unemployment

A

short term, looking or in between jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

seasonal unemployment

A

based on seasons, christmas, skiing etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

structural unemployment

A

mis match between skills and jobs availible (switched for machinery etc)
-e.g australias car industry
-any specific jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

how is unemployment measured

A

NAIRU
-where unemployment is supply side (no inflation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

labour force survey

A

lagging indicator

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

unemployment defintion

A

occurs when someone is willing and able to work but does not have a paid job

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

employment definition

A

includes people who are in a paid job for one hour or more a week

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

not in the labour force

A

people not in a paid job, and who are not actively looking for work

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

calculating the unemployment rate

A

-percentage of people in the labour force that are unemployed

unemployed / labour force

x 100 = unemployment rate

-sum of employed and unemployed people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

participation rate

A

-percentage of people in the working age population that are in the labour force

labour force/ working age population

x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

who is considered in the labour market

A

-unemployed people
-employed part time
-employed full time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

who is considered not in the labour force

A

-retired (pensioners_
-peremenantly unable to work (disabled)
-not looking for other reasons (in jail, long service leave, stay at home parents)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

working aged population

A

15-64

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

main types of unemloyment

A

cyclical= occurs with changes in the economic activity in the business cycle, dependant on demand factors, change during a contraction/ trough, medium term in nature (12 months)

structural=occurs due to a mismatch between the jobs that are availible and people looking for work (e.g lack of skills), usually occurs due to increase in technology

frictional unemployment= unemployment that occurs when people are in between jobs or are looking

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

types of unemployment not took into consideration by rba

A

-underemployment= people are working less hours but could and are willing to work more

-hidden unemployment= when people are not counted as unemployed, but would work if they had a chance, have been discouraged due to turndowns of employers

seasonal unemployment= changes in seasons result in more employement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

when does unemployment occur

A

willing and able workers who can not find gainful employment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

full emplpoyment

A

situation where an acceptable number of people are unable to find a job
-sometimes reffered to as a absence of cyclical unemployment

24
Q

govt goal for unemployment

25
definition of the goal of full employment
lowest rate of unemployment (4.0-4.5%) that will not cause inflation to accelerate, would also be no cyclical unemployment
26
hard core unemployment
unemployment due to personal charicteristics (e.g history of substance abuse)
27
NAIRU stands for
non accelerating inflation rate of unemployemnt -is a stable and non accelerationary inflation rate -NAIRU commonly increases following an economic downturn
28
current rate of unemployment
4.0
29
labour force survey
conducted monthly, lagging indicator, as it displays unemployemnt from some time ago
30
what types of unemployment are used in NAIRU
-structural -seasonal -frictional -hardcore
31
under utilisation rate
-those unemployed are working but working fewer hours than they would like to -rate= percentage of ppl unemployed and people underemployed Unemployed persons + underemployed person \ labour force x 100
32
to find unemployment rate, ABS surveys
-peopleover the age of 15 -actively seking to be employed -able and willing to take up employment
33
limitations of ABS unemployment rate
-does not include groups that would most likely make unemployment -has to work 1 hour to be considered employed -many people lie for benifits -small sample size
34
long time unemployment
individuals have been unable to get a job for 52 weeks or more
35
other usefull measures of unemployment
-aggregrate hours worked
36
causes of types of unemployemnt
cyclical- weaker aggregrate demand structural-change in supply conditions
37
causes of cyclical unemployemnt
-when AD increases, so does cyclical unemployment
38
causes of structural unemployment
-increased technology -mismatch of skills -business closures or re allocation
39
consiquences if unemployment is too high
-lower ouput and incomes due to wasted capacity -lower income and greater inequality lead to lower material living standards -govt.s finances and abilityt to provide adequate support weakens
40
consiquences if unemployemnt is too low
-inflationary pressures -undermines interntaional competitiveness
41
goal of low and stable inflation
the goal of low inflation is the general price level to rise between 2-3% per year on avg. over time, measured by changes in the CPI
42
inflation txt book definition
the goal of low inflation is for the general price level to rise between 2-3% per year on average over time, as mesured by changes in the consumer price index
43
disinflation
occurs when there has been a slowdown in the rate of inflation and prices rising more greatly
44
govts. reasoning for goal of low and stable inflation
-want our rate of inflation to be generally lower than those of our trading parter to increase AD -ENSURE MAINTAINING OG PURCHASING POWER -disincentive effect on taxation -wage price spiral
45
some inflation can be good how
-quality of products increase -real wages to decrease nominal wages
46
diffrent ways to represent inflation
cpi= how high averadge prices of consumer products are now compared to prices in previous period (called base period) which are assigned an index value of 100
47
process of calculating CPI
1. ABS selects over 100,000 g/s deemed most important to consumers in Australias urban areas 2. the products are categorised and each category is weighted according to their relative importance to consumer (i.e how much they make up of the averadge persons total spending) 3. a weighted averadge is calculated 4. this number is converted into an index number compared to the base period which has the index number 100
48
headline rate of inflation
CPI
49
underlying inflation rate
refers to long term in price level of g/s excluding short term fluctuating caused by volitile items like food and energy
50
underlying inflation rate involves
-trimmed mean: headline inflation rate exluding the 15% of products whose prices increased the most and the 15% of products rthat decreased the most -weighted mean=headline inflation rate excluding the top 25% and bottom 25% of price changes -CPI all groups excluding volitile items
51
quaterly inflation rate
cpi for quater y- CPI for quater x / CPI for quater X x 100
52
annualised inflation rate
estimation for that the rate of inflation will be over the corse of the whole year based on the quaterly inglation in one quater annualised inflation rate= quaterly inflation rate x 4
53
annual inflation rate
actual percentage inflation that occured in a one year period , comparing CPI from one quater to the CPI from the same quater the year before CPI for quater 1 year y-CPI for Quater 1 year x / cpi for quater 1 year x x 100
54
factors effecting inflation
increase in demand/ supply / decrease
55
inflation
when prices paid for wide range of g/s and services are generally rising
56
deflation
generally falling prices over a period of time( prices are negative)
57
diffrence between disinflation and deflation
disinflation: when prices are still increasing but at a slower rate compared to past rates deflation: when prices are decreasing negatively

Economics (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions