Economics: GDP, Inflation and Unemployment, Econ practice
Natural Rate of Unemployment
The unemployment rate that would exist in the absence of cyclical and seasonal unemployment (meaning structural and frictional unemployment).
Seasonal Unemployment
Unemployment due to regular, recurring change in the hiring needs of of certain industries due to changes in weather and social factors like holidays
the official unemployment rate is not an accurate indicator of actual unemployment in the economy because
the official rate does not include persons who have given up looking for work
deflation means that
the overall price level is decreasing
which of the following statements exemplifies the concept of structural unemployment
workers are fired because their skills are no longer in demand.
Labor Force
All of those actively looking for work and those who have a job.
if real GDP is 200 billion and the price index is 200, nominal GDP is
$400 billion
COLAs
Cost of Living Adjustments. Automatic alterations of a persons pay such that it changes with the rate of inflation.
The Business Cycle
Periodic episodes of economic expansion (high growth, low unemployment, high inflation) followed by contractions (recessions or depressions)
Depression
Real decline in GDP of 10% or more OR Three or more years of GDP decline
Inequality for All
Robert Reich film discussing the uneven wage distribution problems in the United States.
Recession
Six or more months of declinging GDP
The 3 Macroeconomic goals
Steady economic growth, stable prices, low rates of unemployment
Nominal Price
The actual price tag on a good--what it costs in current currency
Underemployment
The employment of workers in jobs that do not utilize their productive potential
Gross Domestic Product (GDP)
The market value of all final goods and services produced in a year within one country. =C + I + G + X
Unemployment Rate
The percentage of the labor force that is not working
Unemployment
The state of wanting a job, but not having one.
Macroeconomics
The study of a country's economy as a whole.
the price in 2015 is $10 and the price in 2016 is $15 so the inflation rate is
50%
the CPI in 2015 is 130 and the CPI in 2017 is 145 what is the inflation rate from 2015 - 2017
15%
If the expected rate of unemployment is 6% and the actual rate is 9% what is the GDP GAP
6%
Intermediate Goods
A good that is used as in imput in the production of final goods and services
Deflation
A sustained fall in the average level of prices
Inflation
A sustained rise in the average level of prices
CPI
A tool to measure the inflation rate based on the weighted average of the prices of a basket of commonly consumed goods.
if the expected rate of unemployment is 6% and the real rate of unemployment is 4% what is the GDP GAP
Actual - natural *2 (-4%)
Hyperinflation
An extermely high or "out of control" rate of inflation.
Cyclical Unemployment
Changes in employment rates due to business cycle fluctuations
Structural unemployment
Changes in employment rates due to technological change and other changes in the structure of the economy
Frictional Unemployment
Changes in employment rates due to the short-term movement of workers between jobs and of first time job seekers
Nominal GDP
GDP in current prices (NOT compensated for Inflation)
Real GDP
GDP in prices from some base year (essentially GDP with inflation factored out).
Great Depression
In the 1930's, a long, world wide downturn in the business cycle, during which GDPs fell and unemployment rates skyrocketed.
what is the formula for the GDP deflator
Nominal GDP/Real GDP x 100
Discouraged Worker
Workers who have stopped looking for work because they believe their efforts are futile. BUT they'd take one!
Lost jobs assembling cars because the factory shutdown during a recession is _____ unemployment
cyclical
you are working at a supermarket bagging groceries but you are unhappy about your wage so you quit and begin looking for a new job at a competing grocery store. What type of unemployment is this?
frictional
CPI measures the
inflation rate for consumers
____ are used in the production of final goods
intermediate
the major difference between real and nominal gross domestic product (GDP) is that real GDP
is adjusted for price-level changes using a price index
which of the following is not a goal of every economy
limited government involvment
which of the following is counted as a part of the labor force
non-institutionalized
all of the following regarding the natural rate of unemployment are true except
only includes people that are structurally unemployed (this is a false statement)
the unemployment rate measures the percentage of
people in the labor force who do not have jobs
which of the following would be true if the actual rate of inflation were less than the expected rate of inflation
people who had borrowed funds at the nominal interest rate would lose
Growth
positive change in real GDP
if overall prices increase at a greater rate than your wage/salary
real wages have decreased
a telephone switch operator is replaced by an automated answering system is ______ unemployed
structurally
