Exam #2 Macroeconomics Chapter 8

Structural

When the demand for labor is falling and employers have committed to high wages, _____ unemployment will result.

Q4

(Figure: The Minimum Wage) Look at the figure The Minimum Wage. What is the quantity of labor supplied at a binding minimum wage of P3?

32 million

(Table: Employment Data) Look at the table Employment Data. The labor force is: Table: Employment Data Full-time employed 20 Million Not working but looking for work 2 Million Part-time employed 10 Million Discouraged workers 1 Million

7.6%

(Table: Labor Force Data) Look at the table Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is:

1.1%

(Table: Price Levels) Look at the table Price Levels. What is the rate of inflation from 2013 to 2014? 2011 221.3 2012 227.7 2013 232.2 2014 234.8

fall

If the growth rate of GDP is above its historical average, then there is a tendency for the unemployment rate to:

unemployed to those in the labor force.

The unemployment rate is the ratio of all of the people:

cause disinflation.

Unanticipated inflation does all of the following EXCEPT:

is the number of people who work part time because they cannot find full-time jobs.

Underemployment

= (number of unemployed workers ÷ Labor force) X 100

Unemployment Rate equation =

Arises from the way inflation makes money a less reliable unit of measurement

Units-of-account costs

2.1%

(Table: The Consumer Price Index (CPI)) Look at the table The Consumer Price Index (CPI). The consumer price index in 2009 was 212.2. In 2010, it was 216.7. What was the rate of inflation from 2009 to 2010? Feb, 2009 212.2 Feb, 2010 216.7 Feb, 2011 221.6 Feb, 2012 224.6

unemployed and part of the labor force

A person who has no job but is looking for one is:

20%

A survey reveals that on a small island 100 people have jobs, 25 people are not working but are looking for jobs, and 45 people are neither working nor looking for work. The unemployment rate on the island is:

NR = F + S Actual Rate = F + S + C 8% = 3% + S 10% = 3 + 5 + C -3 -3 - 8 = 8 + C 5% = S 2 = C

Actual Rate 10% Natural Rate 8% Frictional Rate 3% Calculate Structural rate of unemployment (Left) Calculate Cyclical rate of unemployment (Right)

= Natural unemployment + Cyclical unemployment

Actual unemployment

real estate agent who leaves a job in Texas and searches for a similar higher-paying job in California.

An example of the frictionally unemployed is a(n)

frictionally unemployed

Anna recently moved to Boston, as her husband, Joe, has a new job as an economics professor at Harvard. Anna is an experienced surgeon who is interviewing with several hospitals in Boston. Anna is:

decreased

As the average age of the labor force increased from the end of the 1970s to the end of the 1990s, the natural rate of unemployment:

The unemployment due to the downturns in the business cycle.

Cyclical unemployment

are nonworking people who are capable of working by have given up looking for a job because of the state of the job market.

Discouraged Workers

is unemployment due to the time workers spend in job search.

Frictional unemployment

= (Nominal GDP ÷ Real GDP) X 100

GDP Deflators equation

= (Price level CY - Price level LY ÷ Price level LY) X 100

Inflation Rate equation

underemployed.

Jim has a part-time job and would prefer to have a full-time job but has been unable to find one. Jim is classified as:

= (Labor Force ÷ Pop. age 16 and older) X 100

Labor force participation rate equation is:

would like to be employed and have looked for a job in the recent past but are not currently looking for work.

Marginally attached workers

Is the real cost of changing a listed price

Menu cost

frictional; structural

Natural unemployment equals _____ unemployment plus _____ unemployment.

= Frictional unemployment + Structural unemployment

Natural unemployment equation

= ((Cost of market basket in a given year) ÷ (Cost of market basket in base year)) X 100

Price Index in a given year equation

= (Nominal Income ÷ Price Level) X 100

Real income equation

= (Nominal Wage Rate ÷ Price Level) X 100

Real wage equation

7.14%

Scenario: Employment in Xenia Xenia has 10,000 people. Of this population, 1,000 residents are below age 16, and 2,000 have given up looking for work. Currently, 500 people are unemployed but are actively looking for work; 2,500 work part-time, and the rest are fully employed. (Scenario: Employment in Xenia) Look at the scenario Employment in Xenia. What is the unemployment rate?

The increased costs of transactions caused by inflation

Shoe -leather costs

Unemployment caused by the changes in the industrial structure of the economy.

Structural Unemployment

the normal unemployment rate around which the actual unemployment rate fluctuates.

The Natural rate of Unemployment

job training and employment subsidies

Which pair of policies is likely to reduce the natural rate of unemployment?