Unemployment and inflation

Question 1

What is the labour force survey?

Answer 1

A survey which is conducted that identifies percentage of unemployed and employed.

Question 2

what is the formula for finding the unemployment rate?

Answer 2

unemployment rate =
=number of unemployed / labour force X100
=(answer)%

Question 3

What is the formula for measuring the labour force participation rate?

Answer 3

labour force participation rate=
= labour force / working age population x100
=(answer)%

Question 4

what is a under-employed worker?

Answer 4

people who work part-time but would like to work more hours

Question 5

What happens when there is trends in labour force participation?

Answer 5

The higher the participation rate, the more labour is available and the higher level of potential GDP

Question 6

What costs can unemployment bring to an economy?

Answer 6

- Costs to economy
   .restraining costs
   .loss of human capital
   . loss of gros sdomestic park
- Costs to the government
   . unemployment benefits drain federal budget
   . oppotunity costs of funds are directed towards     unemployment benefits
   . loss of tax revenue
- Costs to individuals
   . loss of income
   . loss of skills
   . restraining costs
   . loss of self esteem
   . Social costs

Question 7

What are the three types of unemployment?

Answer 7

• Cyclical unemployment
• Structural unemployment
• Frictional unemployment

Question 8

What is Cyclical unemployment?

Answer 8

due to economic fluctuations

Question 9

What is structural unemployment?

Answer 9

arrises from changes in technology and structure of economy

Question 10

What frictional unemployment?

Answer 10

Arrises form normal labour turnover

Question 11

What is seasonal unemployment

Answer 11

unemployment due to the lack of demand during certain times of the year.

Question 12

What is full employment?

Answer 12

full employment occurs when all unemployment is frictional and and strucutral

Question 13

is zero unemployment, employment?

Answer 13

NO

Question 14

What does NAIRU stand for?

Answer 14

non-accelerating inflation rate of unemployment

Question 15

How to reduce a job search?

Answer 15

information

networking

Question 16

What is creative destruction?

Answer 16

process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one

Question 17

how does government policy affect unemployment?

Answer 17

• minimum wage
• labour mark deregulation
• social security and other payments
• Trade unions

Question 18

What is labour mark deregulation?

Answer 18

a shift from highly centralized wage and industrial relations system to a relatively deregulated system

Question 19

What is the unemployment trap?

Answer 19

The unemployment trap is a situation when unemployment benefits discourage the unemployed to go to work

Question 20

What is a efficiency wage?

Answer 20

a higher-than-market wage paid by a firm to increase worker productivity.

Question 21

What are the benefits of the efficiency wage?

Answer 21

may reduce the need for work monitoring
provide motivation for more productive work
increases the labour supply

Question 22

What is inflation?

Answer 22

A Sustained increase in the general level of prices in the economy

Question 23

What is the inflation rate?

Answer 23

it is a percentage increase in the general price level i the economy from one year to the next.

Question 24

How is inflation measured?

Answer 24

to measure price level the Gdp deflator is used.
Consumer price index measuring the cost of living
Producer price index tracks the price of goods and services at all stages of production

Question 25

What does the consumer price index (CPI) measure?

Answer 25

measures changes in retail prices of a basket of goods and services representative of of consumption expenditure by typical australian households in capital cities.

Question 26

What is the formula for finding inflation

Answer 26

inflation rate 2014 | = CPI Current year - CPI Last Year / CPI Last year x100

Question 27

What are nominal values?

Answer 27

Nominal values are not adjusted for inflation and increases in nominal value which reflects on the effect of inflation

Question 28

What are real values?

Answer 28

Real values are adjusted for inflation which enables the comparison of quantities as if prices had not changed

Question 29

what are some problems with inflation?

Answer 29

- income redistribution - Bracket creep - Menu costs - unanticipated inflation

Question 30

What is income redistribution?

Answer 30

means people on fixed incomes are likely to experience reduced purchasing power due to inflation

Question 31

What are menu costs?

Answer 31

Cost of updating prices

Question 32

What is bracket creep/fiscal drag

Answer 32

bracket creep is where higher tax rate applies to a taxpayer, as their income increases overtime.

Question 33

What is Hyper-inflation?

Answer 33

Extremely rapid increases in the general price level

Question 34

What causes hyper-inflation?

Answer 34

associated with political instability and is usually accompanied by severe recession and economic and political turmoil.

Question 35

What causes inflation?

Answer 35

- production may be unable to meet demand - upward pressure is put on prices and nominal wages - cost push inflation - sources of a supply shock

Question 36

What is demand pull inflation?

Answer 36

caused by an increase in the aggregate demand for goods and services

Question 37

what is aggregate demand?

Answer 37

quantity of goods and services demanded by households

Question 38

what is cost push inflation?

Answer 38

arises as a result of anything causing a decrease in aggregate demand.

Question 39

what are sources of supply shock?

Answer 39

``` - increases in: import prices wages indirect taxation monopoly power in product markets -natural disasters ```