ECON 144: Exam 2
50 Cards in this Set
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What does it mean to be employed?
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currently working, even if temporarily away from their jobs
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What does it mean to be unemployed?
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actively tried to find a job in the past four weeks
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What is the labor force?
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sum of employed and unemployed
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What is Unemployment rate?
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percentage of the labor force that is unemployed
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What classifies people to not be in the labor force?
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people that do not have a job and have not looked in four weeks
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How do you calculate unemployment?
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Number of unemployed/ labor force
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How do you calculate labor force participation rate?
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labor force/Working-age population
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How do you calculate the Employment to Population Ratio?
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(employed/working-age population) X 100
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What are the four drawbacks of the establishment survey?
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1. doesn't include self-employed
2.may fail to count some persons employed at newly opened firms
3. no info on unemployed
4. can be revised as data from additional establishments
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What is frictional unemployment?
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short-term unemployment that arises from the process of matching workers with jobs
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what is seasonal unemployment?
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like farmers, or teachers. Where during a certain period of time, people are just simply out of work
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structural unemployment
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persistent mismatch between the job skills or attributes of workers and the requirements of jobs
ex: animation artist
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What is cyclical unemployment?
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workers who lose their jobs because of recession
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What does 6.1% mean?
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% of labor force that is UE
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What is the number of employed Americans?
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146.37 M
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How many people in America are classified unemployed?
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9.59 M
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How many people are classified as not in the Labor Force?
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92 M
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What things are NOT included at all in calculating unemployment?
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Under 16, Prison, Military, Hospitalized
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What are marginally attached workers? and what amount of Americans are marginally attached?
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1. people that have looked for a job in the past year
2. 2.141 M
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What are discouraged workers? and what amount of Americans are discouraged?
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1. gave up looking for a job
2. 775.000
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What is the amount of people that are working part-time for an economic reason?
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7.277 M
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How do you calculate Labor force participation?
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labor force/who could be
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What are the four reason for UE?
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-Efficiency Wages
-Labor Unions
-Minimum wage
-Unemployment Insurance
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Explain efficiency wages
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wages "exceed" going market wage to keep workers happy, so that they value their job more, therefore producing more
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Explain Labor Unions
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organizations of workers that bargain with employers for higher wages and better working conditions, 9% of workers outside of government sector are unionized
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Explain why Minimum Wage would be a problem for unemployment
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some workers will be UE who would have been employed if there were no minimum wage. UE rate will be higher than it would be without a minimum wage
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explain Unemployment Insurance
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SS checks, US is paying people to not work, but it also keeps the rippel going
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What is inflation?
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continual rise in the overall price level
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What are the two ways to calculate inflation?
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nominal/real
or
CPI (consumer price index)
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What is CPI?
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measures how prices change over-time using the market basket
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What are the top three categories of the Market Basket, and there percentages?
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Housing-41 %
Transportation- 17%
Food & Bev-15%
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What is the current CPI? and What does it mean?
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CPI-237.9 using 1989
means that something that cost 100 then cost 237.9 now
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What is the CPI percentage in the last year?
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1.7%
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What are some reasons CPI would get it wrong?
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1. quality bias (McDonalds-bastards)
2. substitution bias (the basket doesn't hold ALL the apples)
3. New product Bias (new products aren't in until they have been out for a while)
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What is Producer price index?
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tracks the prices firms receive for goods and services at all stages of production
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What are nominal variables?
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economic variables that are calculated in current-year prices
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How would you get the real variable of inflation?
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by dividing the nominal variable by a price index
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What is an interest rate?
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the cost of borrowing funds, expressed as a percentage of the amount borrowed
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What is the nominal interest rate?
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The stated interest rate on the loan
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What is the real interest rate?
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corrects the nominal interest rate for the effect of inflation on purchasing power
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How do you calculate real interest rate?
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Nominal interest rate-inflation rate
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labor productivity
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quantity of gods and services that can be produced by one worker or by one hour of work
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What is capitol?
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manufactured goods that are used to produce other goods and services
ex. computers, factory buildings, machine tools
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Explain the Demand and Supply for loanable funds market
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Demand: downward sloping b/c the lower the interest rate, the more investment projects firms can profitably undertake, and the greater the quantity of loanable funds they will demand
Supply: upward b/c the higher the interest rate, the great the quantity of saving supplied
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What are the phases of a business cycle? explain them
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expansion phase- production, employment, and income are increasing
peak-end of expansion
recession phase-production employment, and income decline
trough-another period of expansion begins
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What determines how fast economies grow?
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-better machinery and equipment
-increases in human capital
-better means of organizing and managing production
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Per-worker production function
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The relationship between real GDP, or output, per hour worked and capital per hour worked, holding the level of technology constant.
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What is an example of technology change?
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the replacement of existing capital with more productive capital (copy machines)
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new growth theory
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(Romer) rate of technological change is influenced by how individuals and firms respond to economic incentives.
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What are the four reasons low-income countries didn't experience rapid growth?
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1. failure to enforce the rule of law
2. wars and revolutions
3. poor public education and health
4. low rates of saving and investment
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ECON 144: Exam 2