September 25

Question 1

What are the 4 main categories of labour market measurement

Answer 1

15+ 
Employed (E)
Unemployed (U)
Those not in labour force
Discouraged workers

Question 2

Define EMPLOYED

Answer 2

Those 15+ who worked FT or PT during last week.

Question 3

Define UNEMPLOYED

Answer 3

Those 15+ who weren’t employed during past week..
Wanted a job immediately…
Actively searched for work at some point during last 4 weeks and couldn’t find an acceptable job.

Question 4

How are those not in labour force defined

Answer 4

Those not employed or unemployed during past week.

Question 5

Define discouraged workers.

Answer 5

Those that wanted a job immediately but have not been looking because they thought they couldn’t find one.

Question 6

What is the formula for unemployment rate?

Answer 6

Unemployment rate= U/LF
or
U/U+E

Question 7

What are the 2 roles of measuring unemployment?

Answer 7

1. How close the economy is producing relative to its production capacity.
2. Measure of labour market tightness (how hard it is for firms to find workers)

Ie. Easier at U= 25% vs U= 5 %

Question 8

What is the formula for employment to population ratio?

Answer 8

= E/ Working Age Pop (15+)

Question 9

What’s the formula for labour force participation rate?

Answer 9

LF/ Working age Pop

Question 10

What’s the difference between stock and flow variables?

Give example for each.

Answer 10

Stocks: variable measured at a point in time
Ie. National wealth, capital stock

Flows: variable measured over two different time periods. Ie. Savings, income, investment…

Question 11

What are the components of disposable national income (Yd)?

Answer 11

Yd= Y+NFP+TR+INT-Tax

Y= GDP income
NFP= net factor payments from abroad to Canadian residents
TR= Transfers from the govt to private sector
INT= Interest on govt debt
Tax= Taxes

Question 12

What’s the formula for private savings? (Sp)

Answer 12

Sp= Yd-C

Expanded:

Sp=Y+NFP+TR+INT+T-C

Question 13

What’s the formula for government saving (Sg)?

Answer 13

Sg=T-TR-INT-G
If Sg is greater than 0= govt surplus
If Sg is less than 0= govt deficit

Question 14

What’s the formula for national savings?

Answer 14

S=Sp+Sg

Or

S=I+NX+NFP

I connotes investment in country, while NX connotes investments abroad.

Question 15

What is the current account surplus and its relationship to national savings

Answer 15

CA = NX + NFP
NX= Net income from selling goods abroad.
NFP= Net income received from investments abroad

S = I + CA

OR under current account deficit

S - CA = I

Question 16

What are the two ways that wealth is accumulated?

Answer 16

1. Through investments in physical capital (domestic). (K)
2. Through CA surplus 》implies Canadian residents are accumulating claims on foreigners (Cf)

Note that 》 FLOW S= I + CA
                      STOCK W= K + CF
S = change in W
I = change in K
CA = change in (CF)