Econ 202 1st Edition Lecture 13Outline of Last Lecture I. GDPOutline of Current Lecture I. How unemployment is measured and how the unemployment rate is calculatedII. Three types of unemployment III. The factors that determine the natural rate of unemploymentIV. The economic costs of inflationV. How inflation and deflation create winners and losersCurrent LectureI. How Is Unemployment Measured? Unemployment is measured by the Bureau of Labor Statistics (BLS)a. It surveys 60,000 randomly selected households every month. Based on the answers to the survey questions, the BLS places each adult (16+) noninstitutionalized civilian into one of three categories:i. Employedii. Unemployediii. Not in the labor forceII. Employed, Unemployed, Not in the Labor Forcea. Employed: People with jobs are employed. b. Unemployed: People who are jobless, looking for jobs, or waiting for the start dates of new jobs.Labor Force: Employed + Unemployedc. Not in the Labor Force: People who are neither employed nor unemployed, such as a full-time student, homemaker, or retiree, is not in the labor force.III. Criticisms of Unemploymenta. Involuntary part-time workers counted as if full-timeThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. Discouraged workers are not counted as unemployedIV. Growth and Unemploymenta. Unemployment and Recessions, 1978–2011 A jobless recovery is a period in which the real GDP growth rate is positive but the unemployment rate is still risingThere are three types of unemployment:1.frictional2.structural3.cyclicalFrictional unemployment:unemployment due to the time workers spend in job search.Scarcity of information creates frictional unemployment.Matching people to jobs takes time.Structural unemployment:more people are seeking jobs in a particular labor market than there are jobs available at the current wage rate, even when the economy is at the peak of the business cycle. Some causes: Labor unionsEfficiency wage & Minimum wageSide effects of government policiesMismatches between employees and employersLabor unionsUnion: an association of workers that bargains collectively with employers over wages, benefits, and working conditions.Labor unions sometimes increase wages above the equilibrium.Efficiency wage & Minimum wageEfficiency wage: wage that employers set above the equilibrium rate as an incentive for better employee