Labor and Unemployment

Question 1

Gross Domestic Product
Expedentiure approach
(sum of 4 types of aggregate spending) + def.
formula?

Answer 1

total dollar value of final goods/services produced in economy in a year
consumption: money households spend
investment: money businesses pay for things
gov’t spend
net export: value of nations exports - imports
C+I+G + (X-M)

Question 2

Circular Flow Diagram
households? (supply/demand)
Firms?
product market?
factor market?

Answer 2

visual representation of economy through exchange of goods and money
h: factors of production + spending / income + goods
F: goods + factor payments / factors of production + spending
P: goods + spending (for both)
F: income + factors of production (both)

Question 3

Limits of GDP (3)
doesn’t include? (3) + 1 (Ex)

Answer 3

nonmarket transactions: no money associated with service
unreported/illegal activities
intermediate goods (eggs in cake)
tax returns
stocks

Question 4

Labor Force
Labor Force Participation Rate

Answer 4

sum of employed and unemployed
(size of labor force/population 16+) times 100

Question 5

Unemployment
Unemployment Rate
Limits of Unemployment Rate (2)

Answer 5

people looking for work (not employed)
percent of labor force not working
discouraged workers, underemployed

Question 6

Frictional Unemployment
Structural Unemployment
Cyclical Unemployment

Answer 6

people are unemployed because they are job searching
unemployed because of a mismatch (over/under qualified)
unemployed because of economic up/downturn

Question 7

Unemployment Rate (Formula will be provided)

Answer 7

of unemployed / labor force times 100