UNEMPLOYMENT Flashcards
What is an economic indicator?
providing insights into economic health (e.g., unemployment rate, GDP).
Name the three types of economic indicators.
Leading, Coincident, and Lagging indicators.
What are leading indicators?
Indicators that change before economic activity changes (e.g., home building approvals).
What are coincident indicators?
Indicators that change in line with economic activity (e.g., GDP, retail sales).
What are lagging indicators?
Indicators that change after economic activity changes (e.g., unemployment rate).
What is a procyclical indicator?
An indicator that rises when the economy grows.
What is a countercyclical indicator?
An indicator that decreases when the economy grows, e.g., unemployment.
Define unemployment.
When people willing and able to work cannot find paid work.
What is the formula for the unemployment rate?
(Unemployed / Labour Force) x 100
How is the participation rate calculated?
(Labour Force / Working Age Population) x 100
Define participation rate.
The percentage of the working-age population in the labor force.
How is the underutilisation rate calculated?
Unemployment rate % + Underemployment rate %
What is underemployment?
Employed individuals wanting more hours than they have.
What is seasonal unemployment?
Unemployment due to decreased labor demand at certain times of the year.
What is frictional unemployment?
Short-term unemployment during job transitions (e.g., people changing jobs).
What is cyclical unemployment?
Unemployment caused by economic downturns in the business cycle.
What is structural unemployment?
Unemployment due to economic shifts, causing a skill mismatch.
Define full employment.
When all willing and able people can find work at current wage rates.
What is the natural rate of unemployment?
The unemployment rate at which the economy is at full employment.
When is NAIRU typically observed?
During steady economic growth, avoiding overheating.
What does NAIRU stand for?
Non-Accelerating Inflation Rate of Unemployment.
According to ABS, how many hours per week qualify as employed?
1 hour or more.
What is underemployment according to ABS?
Working but desiring more hours.
How is the underemployment rate calculated by ABS?
(Underemployed / Labour Force) x 100
What impact does cyclical unemployment have on hiring practices?
Firms reduce hiring to cut costs during economic downturns.
Why is frictional unemployment considered necessary?
It allows labor market flexibility as workers transition jobs.
What is hidden unemployment?
People not actively seeking work but desiring employment, not included in official unemployment rates.
