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Questions and Answers
Which of the following are types of unemployment? (Select all that apply)
Which of the following are types of unemployment? (Select all that apply)
- Frictional (correct)
- Seasonal
- Structural (correct)
- Cyclical (correct)
What is the natural rate of unemployment?
What is the natural rate of unemployment?
Structural + Frictional
What is the formula for the unemployment rate?
What is the formula for the unemployment rate?
(Labor force - Employed) / Labor force x 100
What is the labor force participation rate?
What is the labor force participation rate?
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What is the CPI formula?
What is the CPI formula?
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What is the inflation rate?
What is the inflation rate?
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How is GDP calculated?
How is GDP calculated?
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What are the three multipliers? (Select all that apply)
What are the three multipliers? (Select all that apply)
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What is inflation?
What is inflation?
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What are the parts of a business cycle? (Select all that apply)
What are the parts of a business cycle? (Select all that apply)
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Study Notes
Types of Unemployment
- Cyclical Unemployment: Arises from economic downturns and is linked to the business cycle.
- Frictional Unemployment: Occurs when individuals are temporarily between jobs.
- Structural Unemployment: Results from advancements in technology or changes in the economy that make certain skills obsolete.
Natural Rate of Unemployment
- Comprises both structural and frictional unemployment, reflecting the minimum level of unemployment in a healthy economy.
Unemployment Rate Formula
- Calculated by subtracting the number of employed from the total labor force, then dividing by the labor force and multiplying by 100 to express it as a percentage.
Labor Force Participation Rate
- Represents the ratio of the labor force to the total population, indicating the active engagement of a population in the workforce.
Consumer Price Index (CPI) Formula
- Calculated as the base cost divided by the CPI and then multiplied by 100 to determine price level changes.
Inflation Rate
- Determined by calculating the difference between the previous CPI and the current CPI, divided by the previous CPI to assess price level changes over time.
Gross Domestic Product (GDP)
- Expressed as GDP = Y = AE, representing the total economic output of a country.
Types of Multipliers
- Tax Multiplier: Measures the impact of tax changes on overall economic activity.
- Government Spending Multiplier: Reflects how government expenditure influences national income.
- Consumer Spending Multiplier: Indicates the effect of consumer spending on economic output.
- Balanced Budget Multiplier: Illustrates the economic impact resulting from simultaneous changes in government spending and taxation.
Definition of Inflation
- Refers to the persistent rise in general price levels in an economy, leading to a decrease in the purchasing power of money.
Components of a Business Cycle
- Peaks: Points where the economy is at its maximum output.
- Troughs: The lowest points in the economy, often preceding a recovery.
- Expansion: A phase where the economy grows, marked by increased production and jobs.
- Recession: A period of economic decline characterized by reduced spending and output.
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