UNEMPLOYMENT Flashcards
(11 cards)
Define Unemployment.
Unemployment refers to a situation where individuals who are over the age of 16 are actively seeking employment but are unable to acquire a job.
What is Full Employment- Unemployment?
Full Employment-Unemployment is an economic situation where all available labor resources are being used in the most efficient way possible, and GDP reaches its full potential. This situation only consists of frictional and structural unemployment.
What is Cyclical Unemployment?
Cyclical Unemployment is a type of unemployment directly linked to the fluctuations of the business cycle. When there’s a ‘boom’ in the economy, more people are employed, and when there is a ‘depression’ people go back to being unemployed. eg, the construction industry.
What is Cyclical Unemployment? ?
Frictional Unemployment occurs when a person leaves or loses their job, it is the time gap between a person leaving a job and finding another one.
What is Structural Unemployment?
Structural Unemployment is long-term joblessness caused by a mismatch between the skills workers possess and the skills needed by employers.
What is the Unemployment Rate?
No. of unemployed/ labor force*100
What does NAIRU stand for?
Non- Accelerating Inflation Rate of Unemployment
What is NAIRU?
It is the unemployment rate at which inflation remains stable, meaning that lowering unemployment below this rate would likely lead to accelerating inflation.
Name a few determinants of NAIRU.
1) The level of structural unemployment
2) The degree of labor market flexibility
3) The nature of the economy
Can government policies influence NAIRU?
Yes, monetary policy can influence fluctuations in the unemployment rate around the NAIRU in the short term.
What are Sticky Wages?
Sticky wages refer to a situation where wages are slow to adjust to changes in labor market conditions, particularly in response to economic downturns.
