Ch. 19: Unemployment & Inflation Flashcards
(36 cards)
UNEMPLOYMENT RATE
3.8%
Why is unemployment bad?
1) Inside PPF (not producing to maximal efficiency)
2) Culture Defining Ourselves By Our Jobs (unemployment -> lose identity)
About what percent of the US Population is in the labor force?
50%
Who ISN’T part of the labor force?
Civilian Non-Institutional Population:
1. retirees
2. homemakers
3. full-time students
4. hospital patients
5. prisoners
6. active military
7. not actively looking for work b/c of responsibilities
8. discouraged workers
Discouraged Workers
people who are available for work but aren’t looking b/c they believe no jobs are available for them
Unemployed
if they:
1. didn’t work in the previous week but were available for work
2. actively looked for work some time during the previous 4 weeks
Labor Force
sum of employed & unemployed workers
Unemployment Rate Formula
Unemployed / Labor Force * 100
Labor Force Participation Rate
Labor Force / Working-Age Population * 100
Employment-Population Ratio
Employed / Working-Age Population * 100
Problems w/ Measuring the Unemployment Rate
How to Distinguish who is unemployed vs. not in the labor force?
ex: Recession -> Increase in Discouraged Workers -> Understated Unemployment
How to Verify Unemployment?
ex: Lying lol
Underemployed
skills not being used ; Uber until get driver’s license
Measures of Employment
1) Household Survey
2) Establishment Survey
3) Payroll Survey
2 & 3 sample business establishments for info on employed persons
Types of Unemployment
1) Frictional Unemployment
2) Structural Unemployment
3) Cyclical Unemployment
Frictional Unemployment
short-term; job is looking for people, you are trying to match with a job
Structural Unemployment
longer than short-term; persistent mismatch between job skills & requirements of jobs; person & job both looking, they don’t match; SKILL-based or Geographic
Frictional & Structural Unemployment are both
microeconomic problems.
Cyclical Unemployment
looking for a job? THERE ARE NONE :( ; unemployment caused by a business cycle recession
Natural Rate of Unemployemnt
sum of structural & frictional unemployment
Full Employment
no cyclical unemployment
Durations of Unemployment
< 5 weeks = 39%
5 - 14 weeks = 30%
Gov’t Policies & Unemployment Rate
unemployed eligible for unemployment insurance payments, vary by state
INFLATION RATE
3.7% OR 3%
Why is inflation bad?
1) Rewards bad people, does nothing for good people by reducing purchasing power
2) Makes it difficult to plan for the future
