Untitled Quiz
48 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What are the consequences of unemployment on individuals?

  • Improved job prospects
  • Loss of income and permanent damage to job prospects (correct)
  • Increased human capital
  • Higher levels of job satisfaction

    • Which group is NOT part of the working-age population?

  • People aged 16 years and older not in institutions
  • Individuals currently employed
  • People aged under 16 years (correct)
  • People who are self-employed

    • What criteria classify someone as unemployed?

  • Voluntarily not working due to personal choice
  • Working part-time but seeking full-time employment
  • Retired but looking for part-time work
  • Not working but actively searching for a job (correct)

    • What is one of the main purposes of the Current Population Survey conducted by the U.S. Census Bureau?

    <p>To determine the status of the U.S. labor force</p> Signup and view all the answers

    What benefit might individuals receive during unemployment?

    <p>Employment benefits</p> Signup and view all the answers

    Which of the following describes the labor force?

    <p>The sum of employed and unemployed workers</p> Signup and view all the answers

    What is a characteristic of individuals 'waiting to be called back' in the unemployment category?

    <p>They have been laid off from a previous job</p> Signup and view all the answers

    What is the significance of job growth post-recession in 2008 and 2009 for the U.S. economy?

    <p>It highlights the importance of job stability and security.</p> Signup and view all the answers

    What defines full employment in an economy?

    <p>The unemployment rate equals the natural unemployment rate</p> Signup and view all the answers

    Which of the following factors can influence the natural unemployment rate?

    <p>The age distribution of the population</p> Signup and view all the answers

    What does potential GDP represent?

    <p>The quantity of real GDP produced at full employment</p> Signup and view all the answers

    How is the output gap defined?

    <p>The difference between real GDP and potential GDP</p> Signup and view all the answers

    What happens when the output gap is negative?

    <p>The unemployment rate exceeds the natural unemployment rate</p> Signup and view all the answers

    Why is unpredictable inflation considered a problem?

    <p>It redistributes income and wealth arbitrarily</p> Signup and view all the answers

    What is the definition of deflation?

    <p>A persistently falling price level</p> Signup and view all the answers

    Which of the following best describes a risk of unpredictable deflation?

    <p>It diverts resources from production</p> Signup and view all the answers

    What are the main characteristics of a discouraged worker?

    <p>They are marginally attached and have stopped job hunting.</p> Signup and view all the answers

    Which type of unemployment arises due to the normal turnover in the labor market?

    <p>Frictional unemployment</p> Signup and view all the answers

    What is meant by economic part-time workers?

    <p>Part-time workers who prefer working full-time but are unable to find full-time positions</p> Signup and view all the answers

    What is the most costly form of unemployment?

    <p>Long-term unemployment resulting from job loss</p> Signup and view all the answers

    Which type of unemployment is characterized by job loss due to technological changes or foreign competition?

    <p>Structural unemployment</p> Signup and view all the answers

    How is natural unemployment defined?

    <p>All unemployment that doesn't include cyclical unemployment</p> Signup and view all the answers

    What characterizes cyclical unemployment?

    <p>A fluctuation in unemployment correlating with economic cycles</p> Signup and view all the answers

    Increasing the number of people entering the labor force is likely to affect which type of unemployment?

    <p>Natural unemployment</p> Signup and view all the answers

    What was the unemployment rate in June 2012?

    <p>8.2 percent</p> Signup and view all the answers

    What does the employment-to-population ratio represent?

    <p>The percentage of working-age population that is employed</p> Signup and view all the answers

    How is the labor force participation rate calculated?

    <p>Labor force ÷ Working-age population</p> Signup and view all the answers

    What was the employment-to-population ratio in June 2012?

    <p>58.45 percent</p> Signup and view all the answers

    Which group is excluded from the official unemployment rate calculation?

    <p>Part-time workers wanting full-time jobs</p> Signup and view all the answers

    Who are marginally attached workers?

    <p>Individuals wanting jobs but not currently looking for work</p> Signup and view all the answers

    Which of the following best describes the labor force in June 2012?

    <p>155 million</p> Signup and view all the answers

    What is the total working-age population in June 2012?

    <p>243.4 million</p> Signup and view all the answers

    What is a cost of high inflation from a social perspective?

    <p>Diversion of resources to inflation forecasting</p> Signup and view all the answers

    What characterizes hyperinflation?

    <p>A rapid increase in prices requiring workers to be paid multiple times a day</p> Signup and view all the answers

    How is the Consumer Price Index (CPI) for a reference base period defined?

    <p>It is equal to 100 for the reference base period.</p> Signup and view all the answers

    What was the CPI value in June 2012, and what does it represent?

    <p>228.8, meaning prices were 128.8% higher than the base period</p> Signup and view all the answers

    What component makes up the largest part of the CPI basket?

    <p>Housing</p> Signup and view all the answers

    Which is NOT a stage involved in constructing the CPI?

    <p>Calculating inflation projections</p> Signup and view all the answers

    How many goods are checked each month for the CPI calculation?

    <p>80,000</p> Signup and view all the answers

    What is the purpose of the Consumer Expenditure Survey?

    <p>To construct the CPI basket</p> Signup and view all the answers

    What was the cost of the CPI basket in the base period?

    <p>$50</p> Signup and view all the answers

    How is the CPI calculated?

    <p>CPI = (Cost of basket at current-period prices ÷ Cost of basket at base-period prices) × 100</p> Signup and view all the answers

    What is the inflation rate if the CPI this year is 140 and the CPI last year was 100?

    <p>40%</p> Signup and view all the answers

    Which of the following is true about the PCE deflator?

    <p>It includes all consumption expenditures.</p> Signup and view all the answers

    How does the GDP deflator differ from the PCE deflator?

    <p>It includes the prices of all goods and services counted in GDP.</p> Signup and view all the answers

    What is the formula for calculating the real wage rate?

    <p>Real wage rate = (Nominal wage rate ÷ GDP deflator) × 100</p> Signup and view all the answers

    If the CPI this year is 140 and last year it was 130, what is the inflation rate?

    <p>6.67%</p> Signup and view all the answers

    What is NOT included in the CPI calculations?

    <p>Real estate</p> Signup and view all the answers

    Study Notes

    Economics

    • This is a textbook or course material on economics.
    • The Eleventh Edition of the textbook is authored by Michael Parkin.
    • The book is a global edition

    Monitoring Jobs and Inflation

    • The material discusses measuring unemployment and inflation as indicators of the U.S. economy's health.
    • How unemployment and inflation rates are calculated is discussed.
    • The reliability of these measurements in reflecting the economy's health is questioned.
    • The weak job growth in the U.S. after the 2008-2009 recession is mentioned.

    Employment and Unemployment

    • Why Unemployment is a Problem: Unemployment results in lost income and production, and loss of human capital.
    • Unemployment benefits are a safety net but don't fully replace lost wages, and not everyone receives them.
    • Prolonged unemployment permanently harms job prospects by destroying human capital.
    • Current Population Survey: The U.S. Census Bureau conducts a monthly survey to determine the status of the U.S. labor force.
    • The population is divided into working-age and non-working-age groups.
    • Working-age population: Individuals aged 16 and older, excluding those in jail, hospital, or other institutions.
    • Labor force: The sum of employed and unemployed workers.
    • To be unemployed: A person must be without work but actively searching for work in the past four weeks, waiting to return to a previous job, or waiting to start a new job within 30 days.
    • 2012 Data The population in June 2012 was 314 million, with 243.4 million of working age. The total labor force was 155 million; employed workers were 142.2 million; unemployed workers were 12.8 million.

    Employment and Unemployment - Key Indicators

    • Unemployment rate: The percentage of the labor force that is unemployed. (Number of unemployed / labor force) * 100.
    • In June 2012 the rate was 8.2%
    • Employment-to-population ratio: Percentage of the working-age population with jobs. (Employment / working-age population)* 100.
      • In June 2012 this was 58.45%.
    • Labor force participation rate: Percentage of the working-age population in the labor force. (Labor force / working-age population)* 100.
      • In June 2012 this was 63.7%.

    Employment and Unemployment Definitions

    • The unemployment rate is designed to measure underutilization of labor resources.
    • The current measure excludes:
    • Marginally attached workers: People who aren't working or looking for work but want and are available for a job and have looked for work recently. Some are discouraged workers who have stopped looking for a job due to repeated failure.
    • Part-time workers who want full-time jobs: Officially considered economic part-time workers and partially unemployed.

    Unemployment and Full Employment

    • Unemployment types: Frictional, structural, cyclical.

    • Frictional unemployment: Arises from normal labor market turnover. People are searching for jobs in a changing job market

    • Structural unemployment: Results from technological change, foreign competition, or changing job locations affecting worker skills. This unemployment lasts longer than frictional.

    • Cyclical unemployment: Is higher than normal during economic downturns (recessions) and lower than normal during economic booms.

    • Natural unemployment: The unemployment rate when there is no cyclical unemployment, including frictional and structural unemployment.

    • Full employment: A situation where the unemployment rate equals the natural unemployment rate. There is no cyclical unemployment

    • Key factors influencing natural unemployment rates: Age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits.

    Real GDP and Unemployment

    • Potential GDP: The quantity of real GDP produced at full employment.
    • Potential GDP: Corresponds to the economy's capacity to produce output on a consistent basis.
    • Output gap: Represents the difference between Real GDP and Potential GDP. Fluctuates with the business cycle.
    • Unemployment rate fluctuations: Changes around the natural unemployment rate in line with the output gap.

    Price Level, Inflation, and Deflation

    • Price level: Average level of prices and the value of money.
    • Inflation: A persistently rising price level.
    • Deflation: A persistently falling price level.
    • Why are predictable inflation/deflation not a problem? Unpredictable inflation/deflation are problems because they redistribute income, wealth, lower real GDP and employment, divert resources.
    • Hyperinflation: A very rapid inflation rate; workers are paid frequently because money loses its value.

    Consumer Price Index (CPI)

    • The CPI measures the average prices paid by urban consumers for a "fixed" basket of consumer goods and services.
    • The reference base period is 1982-1984, with a CPI of 100.
    • CPI for June 2012 was 228.8.
    • CPI construction: Selecting the CPI basket, conducting monthly price surveys, and calculating CPI values.
    • CPI basket constituents: Housing (largest component); Transportation and food & beverages (next largest components); other components account for 26%.
    • Monthly price surveys: BLS employees check the prices of 80,000 goods in the CPI basket in 30 metropolitan areas every month.

    CPI Calculation

    • CPI calculation formula: (Cost of basket at current-period prices / Cost of basket at base-period prices) * 100
    • The base year is the period against which the price increase or decrease is measured. The chosen base period has a defined CPI of 100.

    Inflation Rate Measurement

    • The inflation rate represents the price level change from one year to the next.
    • Inflation rate calculation formula: [(CPI this year - CPI last year) / CPI last year] * 100

    Other Price Level Measures

    • Personal Consumption Expenditure (PCE) deflator: A broader measure of the price level than CPI, including all consumption expenditure.
    • GDP deflator: Similar to the PCE deflator, but includes prices of all goods and services included in GDP

    Real Variables in Macroeconomics

    • Using the deflator to convert nominal variables into real values.
    • Example of calculating real wage rate: (Nominal wage rate / GDP deflator)* 100.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Chapter 22 PPT for Spring 2018 PDF

    More Like This

    Untitled Quiz
    37 questions

    Untitled Quiz

    WellReceivedSquirrel7948 avatar
    WellReceivedSquirrel7948
    Untitled Quiz
    18 questions

    Untitled Quiz

    RighteousIguana avatar
    RighteousIguana
    Untitled Quiz
    50 questions

    Untitled Quiz

    JoyousSulfur avatar
    JoyousSulfur
    Untitled Quiz
    48 questions

    Untitled Quiz

    StraightforwardStatueOfLiberty avatar
    StraightforwardStatueOfLiberty
    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser