Quiz Five Flashcards
Employed person
Has worked the week prior to the survey or if they were temporarily away from their jobs
Household survey
Measure used to collect data used to compute unemployment rate by interviewing a sample of households
Unemployment
If a person didn’t work in the previous week but were available for work and had actively looked for work at some time over the previous month
Labor force
Sum of employed and unemployed workers in the economy
Unemployment rate
Percentage of the labor force that’s unemployed
Groups who aren’t considered part of the labor force
Retirees, homemakers, students, those in prison or active military service
Unemployed but stopped looking for work, and discouraged workers
Discouraged workers
People available for work but who haven’t looked for a job because they believe no jobs are available for them
Unemployment rate calculation
Unemployed people/ labor force * 100
Labor force participation rate
Labor force/working age population * 100
Employment population ratio
Measures % of working age population that’s employed
Employed/ working age population * 100
Issues with measuring the unemployment rate
BLS doesn’t reflect the actual state of joblessness in the economy —> overstates
It also counts people as unemployed if they hold part time jobs but want to work full time
The higher the labor force participation rate, the ___ labor will be available and the ___ the GDP
More, higher
Frictional unemployment
Short term unemployment that arises from the process of matching workers with jobs
Seasonal unemployment
Frictional unemployment due to calendar events
Structural unemployment
Persistent mismatch between skills/attributes of workers and job requirements
Cyclical unemployment
Unemployment caused by a business cycle recession
Full employment
The only remaining unemployment is frictional
Natural rate of unemployment
Unemployment rate when cyclical unemployment is 0, rate is between 4&5%, and the economy is at full employment
Sum of frictional and structural unemployment
Can rGDP exceed potential GDP?
Yes economy can rise above capacity, usually in short bursts when the economy booms
Potential GDP
RGDP when all firms operate at capacity
Capacity
Maximum possible production at a sustainable pace
Marginally attached workers
Those who looked for work in the last year but stopped in the last month, either for non economic reasons or because they became discouraged
Underemployment rate calculation
Unemployed + marginally attached + part time, want full / labor force + marginally attached workers
Natural unemployment rate calculation
Frictionally and structurally unemployed/ labor force
Creative destruction
An industry or business replaces another in search of more profits by introducing new or better products
