H-Econ Exam 4 Flashcards
(57 cards)
3 Types of Unemployment (ex.)
Frictional
Cyclical
Structural
Frictional - People are not employed but transitioning for better job
Cyclical - Co. supply and demands (success or failure) are the basis for employing people due to production
Structural - Unemployment caused by rifts between higher demand of more skilled workers, but there is an influx of underskilled workers
Employed people vs. Unemployed people differentiations
Unemployed people include all of those able-bodied and seeking work in the civilian labor force.
Discouraged workers are a subcategory of unemployed who are able to work but have decided to not look for work.
Economists see outsourcing as a prime example for
comparative advantage (ch. 2)
The demand for labor is a
Derived Demand: where the no. of workers hired and the wage rate are determined at the intersection of the MRP curve and Marginal cost curve for labor.
The Marginal cost curve for serves as the supply curve for labor
The “Backward Bending” supply curve
Is the phenomena when higher wages motivate workers to work less in replacement for leisure.
Unions on wages can increase union wages and decrease union nonunion wages and increasing nonunion employment in market. The effect of ____ ____ is to raise income and reduce employment.
Licensing requirements
Although retained workers benefit from the higher wage rate, the general view is
That increases in the min. wage creates unemployment
What is defined in terms of total people who work / are seeking work which include: resident armed forces.
Labor force
Related concepts: Civilian labor force, labor force participation rate, employed labor force, and unemployed labor force
What are the changing trends in the labor foce?
Older workers - have decreased Female workers - have increased Unskilled workers - decreased Service Oriented jobs - Increased Agricultural jobs - Decreased Union jobs - have decreased
The BLS measures unemployment by conducting how many surveys per year collecting approx. 60k sources of data?
12 - because they do it monthly
Offshore and outsourcing jobs have spread from ____ to ___
spread from manufacturing to service jobs
The rise and fall of economic activity relative to economy’s long term growth trend
Business Cycle
3 forms of Business cycles Major Minor Long-Wave (Describe)
Major: Wide fluctuations and serious contractions (success and failed)
Minor: No severe fluctuations - business’s staying afloat
Long-wave: cycles that last 50-60yrs
Example of internal & external forces that bring about business cycles
Internal: production, income, demand, credit, interest rates, and inventories
External: pop. growth, wars, basic changes in nation’s currency, natural catastrophes
Inventories play various roles in business cycles.
During troughs inventories would _____.
During expansions inventories would ______.
During peaks inventories would _____.
During contractions inventories would _____.
Inventories will drop in “troughs”
Inventories will increase to meet demand in “expansion”
Inventories will inventories and sales will increase in “peaks”
Inventories will reduce due to excess bc price stabilizes and demand slacken in “contraction”
If a business starts to expand through increased: production, employment, inventories, and financing what type of sources can overcome the effects of a trough?
Internal forces
Psychological impact on the business cycle
If investors perceive the economic conditions in the imminent future to be good or bad they will either increase or decrease their investment / financing the business.
Difference between
Leading indicators
Lagging indicators
Coincident indicators
Leading indicators precede peaks and troughs
Lagging indicators occur after turning points for general business
Coincident indicators act coinciding with peaks and trough activity
Major theories concerning causes to business cycle
See chap. 12
The Aggregate Supply and Aggregate Demand curves are used to explain the levels of national income and output and determine the equilibrium level average of prices and total output in the economy.
How are they different?
AD: Shows ttl amt. or real output *buyers will purchase at alt. prices
AS: Shows qty. of ttl. real output *producers will offer for sale at alt. price levels
Classical economists believe
The equilibrium output is normally the full-employment output
Aggregate expenditure is
Consumption investment + Goverment expenditure + Net Exports= Ttl planned spending
Chap 11: The Circular Flow of Income is the operation of demand output + income + new demand. What are its 2 channels of output and input called?
Leakages and Injections
Leakages include
Resource income received and not spent on domestic firms (i.e. imports)
