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macroeconomics > chapter 9 > Flashcards

chapter 9 Flashcards

1
Q

what are the 2 categories that unemployment issues can be divided in to?

A

long-run problems
short-run problems

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2
Q

what does the natural unemployment rate reflect?

A

the imperfections of the real world

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3
Q

what is an example of an imperfection of the real world?

A

the time exhausted trying to find a job that matches a workers skill set

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4
Q

what is the non-accelerating inflation rate of unemployment?

A

another name for the natural rate of unemployment

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5
Q

what is removed when assessing monetary policy?

A

the non-accelerating inflation rate of employment or the natural rate of unemployment

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6
Q

if the aim of a government policy is to reduce the natural rate of unemployment, how would go achieve that?

A

they would focus on improving the efficiency of the job matching process

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7
Q

what are 3 examples of government policies that are aimed at reducing the natural rate of unemployment?

A

job placement services
public training programs
reducing regulations that restrict labour

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8
Q

why can the natural rate of unemployment still fluctuate over time even with improved efficiency?

A

due to factors of structural change

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9
Q

why will structural change cause fluctuation in the of the natural rate of unemployment?

A

structural change will cause a change in the composition of the labour force and will match the dominant sectors in the economy, this will cause people in less dominant sectors to lose their jobs

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10
Q

how will more jobs impact the demand of goods and services?

A

it will increase the demand for goods and services

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11
Q

what can structural change encompass?

A

the rise and fall of certain industries within the economy

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12
Q

define the natural rate of unemployment?

A

the rate of unemployment that is present in a healthy and growing economy in the long run (the diffrence between the short-run and long-run employment rates)

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13
Q

what are the 2 types of unemployment in the natural rate of unemployment/ unemployment in the long-run?

A

frictional unemployment
structural unemployment

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14
Q

what is frictional unemployment?

A

unemployment that occurs when workers voluntarily change jobs or, enter or exit the work force

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15
Q

what is structural unemployment?

A

unemployment resulting in a mismatch between workers skills and job requirements

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16
Q

when there is unemployment due to quantity of labour supplied exceeding quantity of labour demanded, what kind of unemployment is that considered?

A

structural unemployment

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17
Q

what can cause the discrepancy between quantity of labour supplied and quantity of labour demanded?

A

the inherent structure of the economy or from regulatory changes

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18
Q

what are the 2 kinds of unemployment in short-run unemployment?

A

cyclical unemployment
seasonal unemployment

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19
Q

what is cyclical unemployment?

A

deviations of the natural rate of unemployment resulting in short-term boom and bust cycles (business cycles)

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20
Q

what is seasonal unemployment?

A

unemployment that arises from seasonal variations in certain industries that rise and fall with season change such as, agriculture, tourism and retail

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21
Q

what is the natural rate of unemployment in Canada?

A

6-7%

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22
Q

how is unemployment measured in canada?

A

every month, Statistics Canada conducts a labour force survey, they collect samples of 54,000 households regarding data of,
unemployment
types of unemployment
length of unemployment

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23
Q

what are the 3 categories that statistics Canada organizes each individual aged 15 years and older in each surveyed household into?

A

employed
unemployed
not in labour force

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24
Q

explain the employed category in the Statistics Canada unemployment survey?

A

the employed category refers to an individual that has spent sometime in the previous week working at a paid job

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25
Q

explain the unemployed category in the statistics Canada unemployment survey?

A

the unemployed category refers to individuals who are temporarily laid off or are looking for work

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26
Q

explain the not in the labour force category in the Statistics Canada unemployment survey?

A

the not in the labour force category refers to any individual that does not fit in to the previous 2 categories of employed or unemployed, people not in the labour force category are typically; full time students or retired people

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27
Q

once the survey data is collected by statistics canada what do they do with the data?

A

statistics Canada will compute a summary of the statistics on the current state of the labour market

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28
Q

what is the labour force?

A

the total number of workers both employed and unemployed

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29
Q

what is the formula to find the number of workers in the labour force?

A

Labour force= number of employed workers + number of unemployed workers

30
Q

what is the unemployment rate?

A

the percentage of the labour force that is unemployed

31
Q

what is the formula to find the unemployment rate?

A

unemployment rate= (number of unemployed workers divided by the labour force) X 100

32
Q

what is the labour force denoted as?

A

LF

33
Q

what is the unemployment rate denoted as?

A

U

34
Q

what is the labour force participation rate?

A

percentage of the adult population in the labour force

35
Q

what is the formula to find the labour force participation rate?

A

labour force participation rate= (labour force divided by the adult population) times 100

36
Q

how will a recession impact the male and female unemployment rate?

A

in a recession the male unemployment rate will be higher

37
Q

why can the statistics on unemployment be hard to interpret?

A

because people move in and out of the labour force all the time

38
Q

what portion of the unemployed workers are recent entrances in to the work force?

A

one third of the unemployment rate are recent entrances to the labour force

39
Q

what percentage of personal unemployment spells end with the unemployed person leaving the labour force?

A

50%

40
Q

when someone is out of the work force but in reality they want to work, what do stats can refer to that person as?

A

a discouraged searcher

41
Q

do discouraged searchers show up in the unemployment statistics?

A

no they do not

42
Q

what is a discouraged searcher?

A

an individual who wants to work but has given up looking for a job

43
Q

what policy can the government use to change the rate of unemployment?

A

the monetary policy

44
Q

what is employment insurance (EI)?

A

a government program that partially protects a workers income when they become unemployed

45
Q

how can employment insurance increase the unemployment rate?

A

the program can influence a worker to not work therefore increasing the unemployment rate

46
Q

what is the pro of employment insurance?

A

it can reduce the hardship of unemployment

47
Q

what is the con of employment insurance?

A

it can raise the unemployment rate

48
Q

what are 3 things that can cause structural unemployment?

A

minimum wage laws
EI claims
licensing/ degree requirements for certain jobs

49
Q

why would minimum wage laws increase unemployment?

A

this will lead to the quantity of labour supplied to exceed the quantity of labor demanded

50
Q

what can lead to short-term unemployment?

A

structural change (like composition change in the labour force)

51
Q

what can lead to long-term unemployment?

A

regulatory changes (EI, minimum wage laws)

52
Q

what is the average unemployment spell in Canada?

A

15.2 weeks

53
Q

what is another cause of unemployment besides structural unemployment?

A

unions
the theory of efficiency wages

54
Q

what is a union?

A

a worker association that bargains with employers over wages and working conditions

55
Q

what are 2 ways unions hope to exert their joint market power?

A

collective bargaining
strikes

56
Q

what is collective bargaining?

A

the process by which unions and firms agree on the terms of employment

57
Q

what are strikes?

A

the organized withdrawal of labour from the firms by the union

58
Q

what sector has the highest rate of unionization?

A

the public sector (education and government)

59
Q

what is the unionization rate of the public sector?

A

71%

60
Q

what is the unionization rate of the private sector?

A

16%

61
Q

how can unions cause unemployment?

A

by raising the minimum wage above the equilibrium level, it will raise the quantity of labour supplied and reduce the quantity of labour demanded, resulting in unemployment and lower employment in other parts of the economy

62
Q

what happens when labour leaves the unionized sector?

A

it results in an excess supply of labour in other non-unionized sectors of the economy, resulting in unemployment

63
Q

what have critiques argued union allocation of labour to be?

A

inefficient and inequitable

64
Q

why is union labour allocation inefficient?

A

the inefficiency is due to high wages reducing employment in ununionized firms

65
Q

why is union labour allocation inequitable?

A

the inequitabability is due to some workers benefiting at the expense of others

66
Q

why does the theory of efficiency wages cause unemployment?

A

due to the benefits rising wages above the previously competitive rate, this causes an excess in labour supply causing unemployment

67
Q

what is the efficiency wage theory?

A

a theory that firms themselves will raises to improve the efficiency of its workers and become more profitable

68
Q

what are the 4 reasons that the efficiency wage theory improves efficiency and profits?

A

workers health
worker turnover
worker effort
worker quality

69
Q

how does worker health due to efficiency wage theory improve efficiency and increase profits?

A

related to the health based poverty trap, better paid workers can afford better nutrition and become healthier and more productive

70
Q

how does worker turnover due to efficiency wage theory improve efficiency and increase profits?

A

paying a higher wage can reduce turnover and lower the incentive for employees to leave and having higher turnover is expensive due to having to train new workers and having unexperienced workers

71
Q

how does worker effort due to efficiency wage theory improve efficiency and increase profits?

A

higher wages makes workers more motivated to put forth their best effort since the opportunity cost of getting fired increases

72
Q

how does worker quality due to efficiency wage theory improve efficiency and increase profits?

A

offering higher wages above the prevailing rate can attract a better pool of workers to apply for the job, this increasing the quality of workers

macroeconomics (13 decks)

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