unemployment and inflation

Question 1

labour force

Answer 1

sum of employed and unemployed workers in an economy

Question 2

census

Answer 2

surveys households on recent job activities (employed or unemployed)

Question 3

unemployed and discouraged workers

Answer 3

un.: out of work but available and looking
dis.: available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them

Question 4

unemployment rate

Answer 4

% of the labour force that is unemployed
nb of unemployed / labour force x 100

Question 5

labour-force participation rate

Answer 5

% of the working-age population in the labour force
labor force / working age pop x 100

Question 6

employment-population ration

Answer 6

employment/ working age pop x 100

Question 7

percentage growth

Answer 7

∆xt = xt - xt-1 / xt-1
long difference = ln (xt/xt-1)

Question 8

problems with measuring the unemployment rate

Answer 8

understate unemployment (judgment and intensity of employment)
overstate unemployment (false statements)
include discouraged workers in unemployed

Question 9

the higher the labour force participation…

Answer 9

more labour available means higher levels of gdp and gdp/capita

Question 10

decline in the employment-population ratio after the 2008 recession

Answer 10

labour market scarring (skills deteriorating)
increased social security disability insurance receivers
affordable care act
min wage
licensing requirements
leisure over work

Question 11

establishment survey/ payroll survey

Answer 11

sample establishments or places of employment about their employees
measures total employment in the economy
excludes self-employed + no info on unemployment

Question 12

job creation and destruction

Answer 12

the natural and normal process of the economy
net changes: nb of people employed = total nb of jobes created - nb of jobs destroyed

Question 13

frictional unemployment

Answer 13

short-term unemployment that arises from the process of matching workers with jobs (job search)
seasonal unemployment

Question 14

structural unemployment

Answer 14

persistent mismatch between the skills or attributes of workers and the requirements for jobs

Question 15

cyclical unemployment

Answer 15

caused by a business cycle recession

Question 16

natural rate of unemployment

Answer 16

fictional and structural unemployment (full-employment rate)

Question 17

government positive influence on unemployment

Answer 17

trade adjustment assistance (structural)
speed up the matching of jobs (frictional)

Question 18

government increases unemployment

Answer 18

unemployment insurance (search for better jobs)
min wage laws (efficiency wages)
labour unions

Question 19

inflation rate

Answer 19

% of increase in the price level from one period to the next

Question 20

consumer price index

Answer 20

avg of the prices a typical urban family of four pays for goods and services they purchase

Question 21

cpi problems

Answer 21

substitution bias (change in purchase habits)
increase in quality bias
new product bias
outlet bias

Question 22

producer price index

Answer 22

avg prices received by producers at all stages of the production process

Question 23

nominal vs real interest rate

Answer 23

nominal: the stated interest rate on the loan
real: corrects the nominal interest rate for the effect of inflation on purchasing power (nominal - inflation)

Question 24

problems with anticipated inflation

Answer 24

decrease in purchasing power
increase real costs of holding cash (decrease in value)
menu costs
taxed on nominal returns rather than real returns (increase tax due)

Question 25

problems with unanticipated inflation

Answer 25

harder to make lending and borrowing decisions
banks: the real interest rate they receive may be zero or negative