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Macroeconomics > Chapter 8 > Flashcards

Chapter 8 Flashcards

1
Q

Employment

A

total # of people in economy aged 15 or older working full or part time

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2
Q

Employment rate equation

A

(#of employed/ population 15 years or older)x100

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3
Q

Unemployment criteria (3)

A
  1. Does not currently have paid job
  2. Available for work and 15 years of age
  3. actively looking for job in past 4 weeks
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4
Q

unemployment

A

total number of available people aged 15 or older are currently not employed and are looking for work

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5
Q

unemployment rate

A

percent of the total number of people in labour force unemployed

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6
Q

unemployment rate equation

A

(#of unemployed workers/labour force)x100

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7
Q

what 2 things make up the Labor Force

A

sum of employment plus and unemployment

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8
Q

Labor Force participation rate

A

percentage of population aged 15 or older in labour force

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9
Q

labor force participation rate equation

A

(labor force/population aged 15 older)x100

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10
Q

Does unemployment still rise even after a recession

A

yes because economy doesn’t recover instantly

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11
Q

Pros of Unemployment rate graph

A

good indicator of likelihood to find a job

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12
Q

cons of unemployment rate graph

A

overstates and understates true level of unemployment

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13
Q

unemployment graph overstates example

A

normal to take time finding a job but when jobs are high, people refuse positions

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14
Q

unemployment graph understates examples (3)

A
  1. Discouraged worker
  2. marginally attached worker
  3. underemployed
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15
Q

Discouraged workers

A

those given up looking for work because they have little to no chance

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16
Q

Marginally attached worker

A

like to be employed, stopped looking for more then 4weeks, may be waiting for employment to begin

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17
Q

underemployed

A

people who work part-time, or do not maximize skills in current job

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18
Q

Job search

A

workers looking for employment

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19
Q

Unemployment graph- recession and expansion

A

rise during recession, fall during expansion

20
Q

Jobless recovery

A

period where Real GDP growth rate is positive but underemployment rate is rising

21
Q

Can unemployment ever reach 0%

A

NO

22
Q

Natural Unemployment

A

unemployment that occurs naturally

Frictional + Structural unemployment

23
Q

Actual Unemployment

A

natural unemployment + cyclical unemployment

24
Q

Frictional Unemployment

A

unemployment due to time workers spend in job search

25
Q

Frictional Unemployment Determinants (3)

A

Scarcity of Information
No jobs available
no matches/refused offers

26
Q

Structural Unemployment (5)

A

Caused by changes in labour demand, improve technology, lack of skills, live far away, unwilling to work at wage offer

27
Q

structural unemployment determinants (5)

A

labour unions, minimum wages, efficient wages, government policies, skill mismatches

28
Q

cyclical unemployment

A

deviation from the natural rate due to business cycles

29
Q

NAIRU?

A

non-accelerating inflation rate of unemployment

30
Q

why is natural rate of unemployment not constant (3)

A

changes in characteristics of

  1. labor force characteristics
  2. labor marketing institutions
  3. government policies
31
Q

labor force characteristics

A

demographic changes ex age, sex,

32
Q

labor marketing institutions

A

unions, temp agencies, technology

33
Q

government policies

A

employment subsidies, insurance, minimum wage

34
Q

real wage

A

wage rate divided by price level

35
Q

real income

A

income divided by price level

36
Q

inflation rate equation

A

((PI year 2 - PI year 1)/PI year 1))x100

37
Q

Cost of Inflation (3)

A

Shoe leather
Menu Cost
Unit of Account costs

38
Q

Shoe Leather Costs

A

increased cause of transactions, money loses value so we spend

39
Q

Menu Cost

A

real cost of changing listed price

40
Q

Unit of Account costs

A

cost arising from the way inflation makes money a less reliable unit of measurement

41
Q

Interest rate

A

price that a lender charges for the use of their savings/items for a year

42
Q

Nominal Interest Rate and example

A

interest rate expressed in dollar terms ex interest on student loans

43
Q

real interest rate

A

nominal interest rate minus rate of inflation

44
Q

Indexing and example

A

way to correct effect of inflation purchasing power by adjusting dollar value of item to inflation rate ex income decrease, price decrease

45
Q

higher than expected inflation rate is good for

A

borrowers and bad for lenders, because they repay loans with funds that have a lower real value than had been expected

46
Q

lower than expected inflation rate is good for

A

lenders and bad for borrowers, borrowers repay loan with funds that have a higher real value then had been expected

47
Q

Disinflation

A

process of bringing down inflation rate

Macroeconomics (10 decks)

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