Econ Unit 2: Unemployment

How do you calculate the unemployment rate?

((# unemployment)/(# in labor force)) X 100

Natural rate of unemployment (NRU)

- frictional plus structural unemployment - the amount of unemployment that exists when the economy is healthy and growing

Labor force participation rate

- percent of population in the labor force - if people leave labor force the unemployment rate falls

Frictional unemployment

- temporary unemployment or being between jobs - individuals are qualified workers with transferable skills

What is the difference between Natural Rate of Unemployment and the Non-Accelerating Inflation Rate of Unemployment?

- they both represent the idea of full unemployment - NRU focuses on output and not having too much unemployment - NAIRU focuses on inflation and not having too little unemployment

Cyclical unemployment

- unemployment caused by a recession - as demand foe goods and services falls, demand for labor falls and workers are laid off - this is sometimes called "demand deficient unemployment"

The official unemployment rate understates the unemployment level in the economy because the official unemployment rate a. ignores the duration of unemployment b. ignores underemployment and discouraged workers c. includes jobs created by the underground economy d. excludes all unemployed teenagers e. excludes frictionally unemployed workers

b. ignores underemployment and discouraged workers

Is a 16 year old high school student who applied for a job but didn't get one yet employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

b. unemployed

Too ____ unemployment can cause prices to rise since consumers spend more money and producers bid up the price of resources

little

Seasonal unemployment

is a type of frictional unemployment, which is due to time or year and the nature of the job

Technological unemployment

is a type of structural unemployment, where automation and machinery replace worker

Discouraged workers

some people are no longer looking for a job because they have given up

Underemployed workers

someone who wants more hours but can't get them is still considered employed

True or false: Our goal of rate of unemployment is zero.

false

Creative destruction

the permanent loss of jobs

Unemployment

workers that are actively looking for a job but aren't working

When is the US at full employment?

4-6% unemployment

The unemployment rate

the percent of people in the labor force who want a job but are not working

The unemployment rate can be misdiagnose the actual unemployment rate because of:

- discouraged workers - underemployed workers - race/age inequalities

Structural unemploymetn

- changes in the labor force make some skills obsolete - these workers do not have transferable skills and these jobs will never come back, workers must learn new skills to get a job - the permanent loss of these jobs is called "creative destruction"

Who is in the labor force?

-Above 16 years -Able/willing to work -Not institutionalized (jail/hospital) -Not in military, in school full time, or retired

What is considered non-accelerating?

a low unemployment that does not cause higher prices

Which type of unemployment would increase if workers lost their jobs because of a recession? a. cyclical b. frictional c. seasonal d. search e. structural

a. cyclical

Is a college student who works part time at a grocery store employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

a. employed

Is a single mom looking for a second job employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

a. employed

Frictional and structural unemployment are present at all times because some people will always be ...

between jobs or replaced by technology

Which of the following individuals is considered officially unemployed? a. Chris, who has not worked for more than three years and has given up looking for work b. Kim, who is going to school full-time and is waiting until graduation before looking for a job c. Pat, who recently left a job to look for a different job in another town d. Leslie, who retired after turning 65 only five months ago e. Lee, who is working 20 hours per week and is seeking full-time unemployment

c. Pat, who recently left a job to look for a different job in another town

Is a 16 year old high school student who quit work for sports employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

c. not counted

Is a prisoner serving a 5 year sentence employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

c. not counted

Is a retired grandparent employed, unemployed, or not counted in the labor market? a. employed b. unemployed c. not counted

c. not counted

Which of the following will be counted as unemployed by the United States Bureau of Labor Statistics? a. persons who quit their previous jobs to stay at home to care for sick parents b. persons who were laid off from their previous jobs and have not applied for a job in two years c. persons who were fired from their previous jobs and are actively applying for work d. persons who have given up looking for jobs after long searches e. persons who quit their previous jobs to start their own businesses

c. persons who were fired from their previous jobs and are actively applying for work

High unemployment during the Great Depression, is an example of what?

cyclical unemployment

Restaurant owners lay off waiters after months of poor sales due to recession, is an example of what?

cyclical unemployment

Steel workers laid off during recession, is an example of what?

cyclical unemployment

When an economy is in equilibrium at potential gross domestic product, the actual unemployment rate is a. equal to the cyclical rate b. greater than the natural rate c. less than the natural rate d. equal to the natural rate e. equal to zero

d. equal to the natural rate

The economy is doing great if there is only...

frictional and structural unemployment

High school or college graduates looking for jobs, is an example of?

frictional unemployment

Individuals that were fired or are looking for a better job, is an example of?

frictional unemployment

The _____ rate of employment is when there is no ___ unemployment

natural, cyclical

Race/age inequalities

the overall unemployment rate doesn't show disparity for minorities or teenagers

If robots replaced truck drivers the result would be ____ unemployment

structural

Full employment output (Y)

the real GDP created when there is no cyclical unemployment