Quiz #3 and #4 Review

Question 1

current unemployment rate

Answer 1

7.9% is the current unemployment rate

Question 2

targeted rate of unemployment

Answer 2

5-6%

Question 3

season unemployment

Answer 3

agriculture, construction, teachers

Question 4

frictional unemployment

Answer 4

in a fluid labor market, matching workers with jobs takes time
-basically just people between jobs

Question 5

structural unemployment

Answer 5

• mismatch between workers and skills/requirements for jobs
• as economy changes, we produce different goods and services
• industries lose jobs

Question 6

cyclical unemployment

Answer 6

• unemployment caused by a recession
• simply a case of too few jobs around
• no demand for stuff, no demand for labor that makes that stuff

Question 7

who calculates the unemployment rate?

Answer 7

Bureau of Labor Statistics

Question 8

numbed of employed

Answer 8

143.3 million employed

Question 9

number of people who looked in past four weeks

Answer 9

12.3 million who looked in past four weeks

Question 10

number not in labor force

Answer 10

89 million not in labor force

Question 11

143.3 million employed
12.3 looking in past four weeks
89 million not in labor force

calculate U3 unemployment rate

Answer 11

12.3/155.6 = 7.9%

Question 12

marginally attached workers

Answer 12

• 2.4 million

- looked for work in the past year but not in the past 4 weeks

Question 13

discouraged workers

Answer 13

• 804,000 people

- gave up work because they believe there are no jobs

Question 14

working part time for economic reasons

Answer 14

you want a full-time, but all you can get is part-time

-8 million people

Question 15

how do you calculate U6 unemployment rate?

Answer 15

unemployed + marginally attached + part time for economic reasons DIVIDED BY labor force + marginally attached

Question 16

labor force participation rate

Answer 16

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

Question 17

what is our labor force participation rate?

Answer 17

63.6% labor force participation rate

Question 18

what two kinds of people arent included in the labor force participation rate?

Answer 18

people under 16 and people in the hospital or prison

-military

Question 19

how do you find the Labor Force Participation Rate?

Answer 19

Labor Force / who could be in labor force

Question 20

two ways to measure inflation

Answer 20

1. GDP Deflator

2. Consumer Price Index

Question 21

Consumer Price Index

Answer 21

• released every month

- calculated by bureau of labor statistics

Question 22

how does the BLS collection information for CPI?

Answer 22

CPI measures the prices of a set of things that ordinary households purchase on a regular basis…

Question 23

What is the Market Basket? what are the percentages of housing, transportation, food and beverage

Answer 23

• the set of goods and services that the CPI examines the price of
• Housing (42%), Transportation (17%), Food and Beverage (15%)

Question 24

How is the CPI calculated?

Answer 24

• to calculate, you shop in January and add up all the values
• you then shop in February, add up all the values and put it on the top of the base month
• In march, we add up the value of all goods and put it over top of base month
• PRICES INCREASE FROM BASE MONTH

Question 25

can you compare GDP deflator and CPI?

Answer 25

YES

Question 26

what is not in the CPI?

Answer 26

-online goods

Question 27

What is the Billion Prices Project?

Answer 27

a project created by MIT economist Dr. Alberto Cavallo to track online prices
-tracks 5 million prices DAILY