Macro Measures Flashcards
Unemployment Rate Equation
(#looking)/(#looking+#working)
Labor Force Participation Rate
(#looking+#working)/(all adults)
3 Types of Unemployment
Frictional, Structural, Cyclical
Which type of unemployment: Shifts in technology cause the layoff of many employees
Structural
Which type of unemployment: Quitting to search for a ‘newer’ job with more benefits
Frictional
Which type of unemployment: The demand for tobacco falls, so many workers are laid off
Cyclical
Which type of unemployment is known as “demand deficient unemployment?”
Cyclical
Which type of unemployment is known to have “creative destruction,” what does it mean?
Structural; the erasing of jobs as technology changes
What are the critiques of the unemployment rate?
- It does not consider the ‘discouraged workers’
- It does not reflect demographic differences
- It does not reflect those underemployed
Inflation
The rise in the general level of pricing, reducing the spending power of real dollars
Disinflation
Slower inflation rate
Deflation
The decrease in the general level of pricing
Name the three problems with CPI
Substitution bias, Product Quality, New Products
Name the three causes of inflation
Too much government spending, demand-pull inflation, cost-pull inflation
Cost-Pull Inflation
Increase in cost of production -> increase in price
Demand-Pull Inflation
Shortage in supply from increased demand -> increase in price
What is GDP
Gross Domestic Product(GDP) is the value of all FINAL goods and services produced within a country
What is GDP per Capita
Measures how many products each person makes
- best measure for standard of living
What factors are not included in GDP?
- intermediate goods(resources used to produce final product)
- nonproduction transactions(financial transactions/purchasing used goods)
- nonmarket/illegal activity
What are the 4 factors included in GDP?
Consumer, Investment, Government Spending, Net Export
