Macroeconomic Objectives Flashcards

1
Q

Define ‘unemployment’

A

People of working age, actively looking for a job, but are not employed.

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2
Q

Define ‘underemployment’

A

People of working age with part time jobs when they would rather be working full time, or with jobs that do not make full use of their skills and education.

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3
Q

What groups are included in the labour force?

A
  • Unemployed
  • Employed part time
  • Employed full time
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4
Q

What groups are not included in the labour force?

A
  • Retired
  • Permanently unable to work
  • Not looking for other reasons
  • Children
  • Students
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5
Q

Unemployment rate formula

A

Number of unemployed
___________________ x 100
Labour Force

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6
Q

Why might statistics under or over estimate employment?

A

Underestimate: due to hidden unemployment
Overestimate: figures don’t include people in underground economy

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7
Q

Define ‘frictional’ unemployment

A

Workers are between jobs.

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8
Q

Define ‘seasonal’ unemployment

A

Demand for labour in certain industries changes on a seasonal basis due to variations in needs.

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9
Q

Define ‘structural’ unemployment

A

Result of changes in demand for particular types of labour skills, changes in geographical location of industries and therefore jobs, and labour market rigidities.

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10
Q

Define ‘cyclical’ unemployment

A

Involuntary unemployment due to lack of aggregate demand for goods and services.

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11
Q

List consequences of unemployment in a country

A
  • Loss of real output
  • Loss of income for unemployed workers
  • Loss of government tax revenue
  • Government costs; unemployment benefits
  • Government costs; social problems arising from unemployment
  • More unequal distribution of income
  • Unemployed people may have difficulty finding work in future
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12
Q

Define ‘consumer price index’ (CPI)

A
  • Measure of the cost of living for a typical hosuehold

* Compares value of basket goods and services from one year to the next

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13
Q

Define ‘inflation’

A

Increase in general price level.

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14
Q

Define ‘deflation’

A

Decrease in the general price level.

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15
Q

Define ‘disinflation’

A

Decrease in the rate of inflation.

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16
Q

Define ‘producer price index’ (PPI)

A

Several indices of prices received by producers of goods at various stages in the production process.

17
Q

Price index for a specific year formula

A

Value of basket good in specific year
_____________________________ x 100
Value of basket good in base year

18
Q

% change in A (change in price index) formula

A

Final value of A - Initial value of A
__________________________ x 100
Initial value of A