question
Four official categories of reasons for unemployment are:
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Job losers, job leavers, reentrants and new entrants
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Calculate the Unemployment Rate
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Unemployment rate + employment rate = labor force. labor force divided by unemployment rate x 100 = unemployment rate
question
Distinguish between the effects of anticipated inflation and unanticipated inflation
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If inflation is unanticipated, creditors are worse off because the real value of their monetary assets falls.
If inflation is unanticipated, debtors are better off because the real value of their monetary debts fall.
When inflation is unexpected, debtors benefit at the expense of creditors.
If inflation is unanticipated, debtors are better off because the real value of their monetary debts fall.
When inflation is unexpected, debtors benefit at the expense of creditors.
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Unemployment has been categorized into four types:
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Frictional, Cyclical, Seasonal, Structural.
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Fictional Unemployment
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Exists when people are between steady jobs.
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Cyclical Unemployment
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is due to a recessions and depressions.
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Seasonal Unemployment
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seasonal pattern of work such as farm laborers. construction.
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Structural Unemployment
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Unemployment resulting from poor match of worker's abilities and skills with current requirements of employers.
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Anticipated Inflation
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The inflation rate that we believe will occur.
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Consumer Price Index (CPI)
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Measures the cost of an unchanging unrepresentative basket of consumer goods through time.
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Producer Price Index (PPI)
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Measures the cost of an unchanging basket of goods sold in primary markets by producers of commodities in all stages of processing. The ___ can be considered general-purpose indexes for non-retail markets.
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GDP Deflator
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Measures the value of goods and services produced by an economy, the basket changes over time.
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Deflation
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A sustained decrease in the average of all prices of goods and services in an economy.
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Expansion
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A business fluctuation during which the pace of the national economic activity is speeding up.
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Contraction
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A business fluctuation during which the pace of national income slows down (recession).
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Unanticipated Inflation
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Inflation that comes as a surprise to individuals in the economy.
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Real Rate of Interest
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The nominal rate of interest minus the anticipated rate of inflation.
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Nominal Rate of Interest
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The market rate of interest observed in contracts expressed in today's dollars.
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Unemployment
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The total number of adults age 16 and older who are willing and able to work and who are actively looking for work but have not found a job.
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Discouraged Worker
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Individuals who have stopped looking for a job because they are convinced that they will not find a suitable one.
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Natural Rate of Unemployment
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The rate that is expected to prevail in the long-run once all workers and employers have fully adjusted to any changes in the economy (equilibrium).
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Full Employment
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A concept that implies some sort of balance or equilibrium in an ever-shifting labor market. In 1986 a 6.5% rate of unemployment was considered full employment.
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Price Index
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The cost of today's market basket of goods expressed as a percentage of the cost of the same market basket during a base year.
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