unit 4: is the economy healthy

Question 1

unemployment

Answer 1

another way to measure economic health, people w/o jobs who are actively seeking work

Question 2

What are the 4 types of unemployment?

Answer 2

frictional, structural, cyclical, seasonal

Question 3

Frictional unemployment

Answer 3

people between jobs for own reasons

Question 4

Structural unemployment

Answer 4

workers skills do not match those needed for available jobs

Question 5

Cyclical unemployment

Answer 5

arises during economic downturn + falls when economy improves/recovers

Question 6

Seasonal unemployment?

Answer 6

company or industry shuts down for a season

Question 7

Why is unemployment never 0%?

Answer 7

Natural rate of unemployment: 2-3% full employment —> calculated

Question 8

What does high unemployment rate mean?

Answer 8

the economy is not growing fast enough/not creating enough jobs
how to fix: lower interest rates (businesses & investment consumers)

Question 9

What does a low unemployment rate means?

Answer 9

the economy is growing too fast, demand exceeds supply/production —> puts pressure on prices
policy action: increase interest rate, decrease business investment, decrease consumers spending, decrease demand, decrease production —> workers are laid of so unemployment rate goes down