unemployment and inflation Flashcards

1
Q

labour force

A

sum of employed and unemployed workers in an economy

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2
Q

census

A

surveys households on recent job activities (employed or unemployed)

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3
Q

unemployed and discouraged workers

A

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

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4
Q

unemployment rate

A

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

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5
Q

labour-force participation rate

A

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

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6
Q

employment-population ration

A

employment/ working age pop x 100

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7
Q

percentage growth

A

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

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8
Q

problems with measuring the unemployment rate

A

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

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9
Q

the higher the labour force participation…

A

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

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10
Q

decline in the employment-population ratio after the 2008 recession

A

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

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11
Q

establishment survey/ payroll survey

A

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

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12
Q

job creation and destruction

A

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

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13
Q

frictional unemployment

A

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

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14
Q

structural unemployment

A

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

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15
Q

cyclical unemployment

A

caused by a business cycle recession

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16
Q

natural rate of unemployment

A

fictional and structural unemployment (full-employment rate)

17
Q

government positive influence on unemployment

A

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

18
Q

government increases unemployment

A

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

19
Q

inflation rate

A

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

20
Q

consumer price index

A

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

21
Q

cpi problems

A

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

22
Q

producer price index

A

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

23
Q

nominal vs real interest rate

A

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

24
Q

problems with anticipated inflation

A

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)

25
problems with unanticipated inflation
harder to make lending and borrowing decisions banks: the real interest rate they receive may be zero or negative