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