Unit 4 A Flashcards
Test review
Inflation and Productivity formula
Wage growth -Productivity growth
The business cycle
Is used to measure fluctuations in GDP and to measure the two problems we deal with in the economy - inflation and unemployment.
If we are expanding In the business cycle,
prices increase, output increases causing unemployment to decrease.
If we are contracting In the business cycle,
prices decrease, output decreases causing unemployment to increase. To officially be in a recession, GDP has to contract for 6 months or 2 business quarters.
How long does the business cycle typically last
7-12 years.
If the economy falls into a recession
automatic stabilizers; Food stamps, Unemployment benefits, Welfare payments will kick in to boost spending. If more help is needed fiscal policies(tax cuts, increased government spending) or monetary policies(lower interest rates) can be used as well.
If the economy is experiencing high inflation
fiscal policies(tax increases, less government spending) or monetary policies(higher interest rates) can be used to slow down spending.
Who is considered employed?
Someone who works at least one hour a week, is on strike, or taking a leave of absence.
Who is considered unemployed?
Someone looking for a job, waiting to be recalled from layoff or starting a new job next month.
What makes up the labor force?
includes anyone classified as employed or unemployment.
What is a discouraged Worker?
If you are not working and not looking for work you will not be considered unemployed. You are considered a discouraged worker.
What is Frictional unemployment
new entries to the labor force(looked for your first job) or people that quit their job and are looking for another job.
What is Structural unemployment
is losing your job to automation, outsourcing or no longer making the goods in the economy at all.
What is Cyclical unemployment
is job loss due to a downturn in the business cycle.
What is Seasonal unemployment
are jobs tied to the weather. In WNY ski resorts layoff workers in the summer and golf courses layoff workers in the winter.
