Unemployment Flashcards
Labor productivity definition
Amount of output a typical worker turns out in an hour
Potential GDP definition
Measure of economy’s normal capacity to produce goods and services when labor and resources are fully employed
Natural rate of unemployment - u* definition
Typical rate of unemployment in a healthy economy
Full employment output - Y* definition
Output by an economy with 0 cyclical unemployment.
Are discouraged workers included in the labor force?
No
Are military personnel included in the labor force?
No
Are students included in the labor force?
No
Unemployment rate - u definition
Percentage of the LABOR FORCE that is unemployed.
Labor force participation rate definition
Portion of population that is in the labor force.
u formula
u = (unemployed/labor force) x 100
Labor force participation rate formula
= (labor force/ population) x 100
Are discouraged workers included in the unemployment rate?
No
GDP in terms of labor productivity
GDP = hours of work x Labor Productivity
Growth rate of potential GDP formula
Growth rate of labor input + growth rate of labor productivity
in short term, growth rates of actual and potential GDP
diverge due to cyclical fluctuations
