Macroeconomic Objectives Flashcards
Define ‘unemployment’
People of working age, actively looking for a job, but are not employed.
Define ‘underemployment’
People of working age with part time jobs when they would rather be working full time, or with jobs that do not make full use of their skills and education.
What groups are included in the labour force?
- Unemployed
- Employed part time
- Employed full time
What groups are not included in the labour force?
- Retired
- Permanently unable to work
- Not looking for other reasons
- Children
- Students
Unemployment rate formula
Number of unemployed
___________________ x 100
Labour Force
Why might statistics under or over estimate employment?
Underestimate: due to hidden unemployment
Overestimate: figures don’t include people in underground economy
Define ‘frictional’ unemployment
Workers are between jobs.
Define ‘seasonal’ unemployment
Demand for labour in certain industries changes on a seasonal basis due to variations in needs.
Define ‘structural’ unemployment
Result of changes in demand for particular types of labour skills, changes in geographical location of industries and therefore jobs, and labour market rigidities.
Define ‘cyclical’ unemployment
Involuntary unemployment due to lack of aggregate demand for goods and services.
List consequences of unemployment in a country
- Loss of real output
- Loss of income for unemployed workers
- Loss of government tax revenue
- Government costs; unemployment benefits
- Government costs; social problems arising from unemployment
- More unequal distribution of income
- Unemployed people may have difficulty finding work in future
Define ‘consumer price index’ (CPI)
- Measure of the cost of living for a typical hosuehold
* Compares value of basket goods and services from one year to the next
Define ‘inflation’
Increase in general price level.
Define ‘deflation’
Decrease in the general price level.
Define ‘disinflation’
Decrease in the rate of inflation.
