Unemployment

Question 1

Difference between not in the labor force vs unemployed?

Answer 1

-Unemployed are people in the labor force who are looking for a job
-People not in the labor force are not working by choice

Question 2

Adult Population

Answer 2

labor force + not labor force
-labor force -> employed + unemployed
-not labor force -> people not working by choice

Question 3

unemployment rate

Answer 3

(number of unemployed/labor force) x 100

Question 4

labor force participation rate

Answer 4

(labor force/adult population) x 100

Question 5

discouraged worker effect

Answer 5

-somebody who’s unemployed (in labor force don’t have a job) after a certain period of time they give up (now they are not in the labor force)

Question 6

what happens to unemployment rate and labor force participation rate during discouraged worker effect?

Answer 6

-unemployment rate goes down (thinking the economy is doing better but its worst because people are not looking for jobs)
-labor force participation rate will decrease (which is bad)

Question 7

natural rate of unemployment

Answer 7

The complete accepted rate of unemployment given

Question 8

cyclical unemployment

Answer 8

actual unemployment rate (made of structural and frictional unemployment)

Question 9

frictional unemployment

Answer 9

unemployment that exist all the time based on the following factors
-job search -> by choice
-sectoral shift -> one sector of a company is changing to a different sector
-unemployment insurance/ benefits -> take longer to find a job because they are getting paid

Question 10

structural unemployment

Answer 10

an inequality between the number of jobs available and number of workers available
generally caused by
-minimum/union wages -> wages above equilibrium
-efficiency wage -> above equilibrium to get better quality workers

Question 11

labor supply (workers)

Answer 11

workers want more money; wages increase

Question 12

labor demand (jobs)

Answer 12

higher the pay; lower jobs available

Question 13

what happens when wages are above the equilibrium wage?

Answer 13

jobs available decreases, workers available increase; structural unemployment occurs

Question 14

what happens when wages are below the equilibrium wage?

Answer 14

Jobs available increases, workers available decreases; nothing happens to employment

Question 15

If the economy is in a recession what type of unemployment will be more prevalent?

Answer 15

structural unemployment

Question 16

During a technology bloom, what type of unemployment may occur?

Answer 16

frictional unemployment

Question 17

efficiency wage

Answer 17

companies choose to pay above equilibrium wage to get the best works

Question 18

minimum wage

Answer 18

required minimum pay that employers pay workers

Question 19

equilibrium wage is 9, minimum wage is 7, quantity labor demand is 7

Answer 19

quantity labor supply is also at 7; structural employment Is 0 because there are more jobs than workers (equilibrium wage is above the minimum wage)