Econ ch20

Which types of unemployment occur even when the economy is healthy and growing?

Frictional and structural

What does "officially unemployed" mean?

The person is a part of the labor force, meaning they are actively seeking work and are able to work.

Aileen is a full-time student working part-time. Will she be considered part of the labor force?

Yes

Janice just graduated from college and is searching for a job that fits her graphic-design skills. Will she be considered officially unemployed?

Yes

Kimberly has retired from the military and now works at the post office. Will she be considered part of the labor force?

Yes

What is the root cause of cyclical unemployment?

Recessions

What is natural unemployment?

Structural and frictional (unemployment during healthy macroeconomic conditions)

What has been the average unemployment rate in the United States since 1970?

6%

What misconceptions do people have about unemployment?

As a nation we should aim for zero unemployment.

An economic downturn can lead mainly to which type of unemployment?

Cyclical

During a recession, fewer individuals fly across the country for vacations. As a result, many pilots and flight attendants lose their jobs. How would these individuals be classified as?

Cyclical unemployment

Which type of unemployment can be negative?

Cyclical unemployment can be negative in an exceptional expansion

If a large group of US workers begins to retire what will be its effect on labor force?

Decrease naturally

What are shortcomings of the official unemployment rate?

Discouraged workers - people who want a job but get discouraged and give up aren't counted. Underemployment workers - part time workers who want full-time jobs. Unemployment timeline - unemployment rate lags behind economic activity. Who is unemployed.

What is structural unemployment?

Employment from changes in the industrial makeup of the economy.

Give an example of a case when unemployment rate is equal to the natural rate.

In a healthy economy

Since 1950, what has happened to the percentage of women participating in labor force?

It has increased

What makes up the sum of the number of unemployed and number of employed people?

Labor force

What is the equation for the labor force participation rate?

Labor force participation rate = labor force / work - eligible population X 100

What types of unemployment exists during healthy economic periods?

Natural unemployment - frictional and structural

Jade has stopped looking for a job because she feels there are no jobs available for her. Will she be considered officially unemployed?

No

Thomas is not working but has given up searching for a job because he believes there are no jobs available for him. Will he be considered part of the labor force?

No

Marcus was an aircraft mechanic for 27 years. An advancement in technology automated his job, so Marcus lost his job. A person who loses his or her job this way would be considered __________ unemployed.

Structural

What are the three types of unemployment?

Structural- caused by changes in the industrial makeup of the economy. Frictional- caused by delays in matching available jobs and workers. Cyclical- caused by recessions or economic downturn.

All three types of unemployment are difficult on households. True or False?

True

What is the natural rate of unemployment?

Typical rate of unemployment in a healthy economy.

Which is the main statistic used to monitor unemployment in the economy?

Unemployment rate

What is the relationship between actual unemployment rate and natural rate of unemployment if the economy is in a very expansionary phase?

Unemployment rate - u Natural rate - u* Healthy economy - u=u* Recession u>u* Exceptional expansion u<u*