Measuring the Cost of Living 2 and Unemployment Flashcards

1
Q

Define hyperinflation

A

a monthly inflation rate of 50%

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

What is hyperinflation associated with?

A

a rapid increase in money supply

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

What is the inflation target for NZ?

A

1-3%

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

Whose job is it to control inflation?

A

the Reserve Bank

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

Why do we not have a target of 0% inflation?

A
  • inflation measures (such as CPI) tend to overstate inflation so a measured zero rate for inflation may actually be deflationary
  • workers resist a fall in wages so a fall in “real” wages can be achieved by raising nominal wages by less than inflation because if wages stay the same but there is inflation, the real wage is going down
  • in a deep recession, we should maybe need to cut interest rates, even push them to negative levels in real terms which can only be done if there is a positive rate of inflation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Define unemployed

A

All people in the working age population who during the reference week were without a paid job, available for work and had either actively sought a job in the last four weeks ending in the reference week, or had a job to start in the next four weeks

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

What are some costs of unemployment?

A
  • economic
  • psychological
  • social
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is meant by the economic costs of unemployment?

A

lost wages and production, decreased taxes and increased taxes

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

What are three general labour force classifications?

A
  • employed
  • unemployed
  • not in the labour force
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A decrease in employment does not necessarily mean

A

an increase in unemployment

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

What do we use to measure unemployment?

A

the household labour force survey

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

What is the HLFS?

A

the nationwide, quarterly survey that takes a representative sample of 15,000 households (about 30,000 people) which measures
- the number of employed and unemployed people
- the number who are not in the labour force
- hours worked
and more

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

What is HLFS used for?

A

as an indicator of the overall health of the economy and the unemployment rate as a key indicator

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

How do we calculate the unemployment rate?

A

unemployed/labour force

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

Is unemployment short or long term duration?

A

short

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

What are four different types of unemployment?

A
  • classical
  • structural
  • frictional
  • cyclical
17
Q

Define structural unemployment

A

This is due to a mis-match between skills that are required and those possessed by workers. This could be due to a mismatch in skills or a mismatch in located

18
Q

Define frictional unemployment

A

This is associated with job search eg. when a short term contract finishes and you are looking for another job

19
Q

Define classical unemployment

A

This is when the minimum wage is higher than the market clearing price and so the supply is higher than the demand for workers and so there is a surplus (ie. people are unemployed)

20
Q

Define cyclical unemployment

A
  • associated with economic downturn
  • not enough aggregate demand in the economy to provide jobs for everyone who wants to work
  • demand for most goods and services falls, less production is needed, consequently fewer workers are needed
  • wages are sticky and do not fall to meet the equilibrium level