Unit 3 Flashcards
(27 cards)
What is unemployment
number of people who do not have a job and currently looking for a job
What is the labour force
All the people who are working / able to work
sum of employment and unemployment
What is the labour force participation rate
percentage of population in the labour force
What are discouraged workers
non-working people who have given up looking for a job because of the state of the job market
What are marginally attached workers
would like to be employed but are currently not looking for a job
What is underemployment
number of people who work part-time because they can not work full time
What is frictional unemployment
unemployment due to the time people spend in job search
What is cyclical unemployment
unemployment caused by a recent temporary setback in the economy
What is structural unemployment
unemployment as the result of more people seeking jobs in a labour market than jobs available as the current wage
What causes structural unemployment
Minimum wage
Unions - by bargaining for all a firms workers collectively they can often get higher wages
Efficiency wages - wages employers set above equilibrium wage rate as an incentive for better performance
What is the natural rate of unemployment
the rate at which unemployment sits around normally
What is natural unemployment
Frictional unemployment +structural unemployment
Cyclical unemployment is a deviation in the actual rate of unemployment from the natural rate
What is actual unemployment
natural unemployment + cyclical unemployment
What causes changes in the natural rate of unemployment
Changes in characteristics such as demographics, changes in labour market institutions, changes in gov policies
What is the rule of 70
The rule of 70 states that 70 divided by the constant growth rate is the time it takes for the quantity to double
E.g. at 5% annually it would take 14 years (70/5=14)
What is labour productivity
output per worker
What can growth be attributed too
Increase in physical capital
Increase in human capital
Technological progression
What is growth accounting
Estimates the contribution to economic growth of each major factor in the aggregate production function
You can measure the rates of growth of physical capital per worker and of human capital
What is the aggregate production function
A hypothetical function that shows how productivity depends on the quantities of physical capital per worker and human capital per worker as well as the state of technology (T)
What are factors that affect economic growth
savings and investment spending
education
research and development
How are growth and inequality linked
Historically, rising GDP per capita has translated into real income for most people, recently in countries such as the US a growing share of income has gone to a relatively small number of people at the top of the income distribution
What is the convergence hypothesis
International differences in real GDP per capita should narrow over time
It holds true among countries with similar characteristics
What are challenges of long run growth
Reduced amount of natural resources
can lead to high levels of resource scarcity
What government action can help the issues associated with long run growth
Carbon tax
Cap and trade systems - total emissions is capped and producers must buy licences to emit greenhouse gases
Incentives for innovation in clean energy sources
