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Flashcards by emma.charleswort, updated more than 1 year ago
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Created by emma.charleswort
over 9 years ago
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| Question | Answer |
| What is unemployment rate? | The percentage of the labour force that is unemployed |
| What is the definition of labour force? | The sum of employed and unemployed workers in the economy |
| What are discouraged workers? | People who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them |
| What is the definition of long-term employment mean? | Those in the labour force who have been continuously unemployed for a year or longer |
| What is cyclical unemployment? | Unemployment caused by a business cycle contraction |
| What us frictional employment? | Short-term unemployment arising from the process of matching workers with jobs |
| What is seasonal unemployment? | Unemployment due to factors such as weather, variations in tourism and other calendar related events |
| What is structural unemployment? | Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs |
| What is the definition of 'natural rate of unemployment'? | The unemployment rate that exists when the economy is operating at potential GDP |
| What does NAIRU stand for? | Non-accelerating inflation rate of unemployment |
| What is the definition of Non-accelerating inflation rate of unemployment? | The level of unemployment below which the rate of inflation will rise |
| What is 'Job Services Australia'? | A national network of private and community recruitment agencies that find jobs for unemployed people and other job seekers |
| What is the definition of 'enterprise bargaining'? | Wages and working conditions negotiations between employers and unions or employers and employees at the workplace level |
| What is price level? | A measure of the average prices of good and services in the economy |
| What is the definition of inflation? | The sustained increase in the general level of prices in the economy |
| What is an inflation rate? | The percentage increase in the general price level in the economy from one year to the next |
| What does PPI stand for? | Producer price index |
| What is a producer price index? | An average of the prices received by producers of goods and services at all stages of the production process |
| What are menu costs? | The costs to firms of changing prices |
| What is the definition of hyperinflation? | Extremely rapid increases in the general price level |
| What is the definition of 'deflation'? | A decline in the general price level in the economy |
| What is 'demand-pull inflation'? | Inflation that is caused by an increase in the aggregate demand for goods and services and production levels are unable to meet this demand immediately |
| What is aggregate demand? | The quantity of goods and services demanded by households, firms and government, plus net exports |
| What is cost push inflation? | Inflation that arises as a result of a negative supply shock - that is, anything that causes a decrease in the aggregate supply of goods and services |
| What is aggregate supply? | The quantity of goods and services supplied by firms |
| How is the unemployment rate calculated? | unemployed / labour force x 100 |
| How is the labour force participation calculated? | labour force / working age population x 100 |
| What does natural rate of unemployment equal? | Frictional + structural |
| What are the major measures of the price level? | 1. GDP inflator 2. Consumer price index 3. Producer price index |
| What potential biases existing calculating the consumer price index? | - Substitution bias - Increase in quality bias - New product bias Outlet bias |
| Why is unanticipated inflation a problem? | Actual real interest rate and actual real wage rate received differ from the expected real interest rate and real wage rate |
| The natural rate of unemployment is not equal to zero because | It is the sum of structural unemployment and frictional unemployment |
| A firm may lay off a substantial number of workers because of......? | a business cycle contraction during which the firm cuts back its production in response to a fall in demand for its products |
| A person who is between jobs in the short run but is actively engaged in job search is considered to be ......? | Frictionally unemployed |
| Experts in hand drawn animation who remain unemployed due to the film industry's switch to computer-generated animation are considered to be......? | Structurally unemployed |
| When a company reduces production and employment during economic recessions, those employees who lose their jobs are generally considered to be........? | Cyclically unemployed |
| Government unemployment benefits tend to.......? | Increase the unemployment rate by lowering the opportunity cost of job search |
| The government of the Republic of Otivia set the minimum wage at 25c per hour in 1938 in its aim to guarantee workers a higher rate of income per hour. This wage was..........? | Probably higher than the equilibrium wage of very low-skilled workers since minimum wages are binding price floors |
| What is considered one of the potential biases in calculating the consumer price index? | 1. Increase in quality bias 2. Substitution bias 3. New product bias |
| The difference between nominal variable and a real variable is that............ | nominal variables are calculated in current-year prices and real variables are measured in dollars of the case year for the price index to correct for the effects of inflation |
| What is an inflation rate? | The percentage increase in the general price level in the economy from one year to the next |
| Suppose that the inflation rate turns out to be much higher than most people expected. In that case what happens? | A borrower will gain from the situation, while the lender will lose |
| The type of inflation that is a greater problem to society is.....? | Unanticipated inflation, since it causes greater redistribution of income between those making payments and those awaiting payments in the future |
| During a recession, a person would prefer to work in an industry that produces what? | During a recession, a person would prefer to work in an industry that produces an inferior good because the demand for inferior goods should increase with decreases in income during a recession |
| During an economic expansion, a person would prefer to work in an industry that produces what? | A normal good because the demand for normal goods should increase in income during an economic expansion |
| If a country engages in free trade, is the total number of jobs in the country likely to decline? | No, because the free trade allows a country to operate more efficiently, which creates more opportunities and more jobs |
| What are the problems with measuring the unemployment rate? | - The number of discouraged workers increases during a recession, therefore the official unemployment rate appears lower than it would otherwise be - Under-employed workers - people are work part time but would like more hours |
| What is the formula for labour force participation rate? | Labour force / working age population x 100 = labour force participation rate |
| What are the types of unemployment? | - Cyclical Unemployment - is due to economic fluctuations - Frictional unemployment - arises from normal labour turnover - Structural unemployment - arises from changes in technology and structure of economy |
| What is the employment rate associated with full employment is called? | Natural rate of unemployment or non-accelerating inflation rate of unemployment (NAIRU) |
| When does full employment occur? | Full employment occurs when all unemployment is frictional and structural |
| What kind of factors affect structural unemployment? | - More university education > structural unemployment - More job retaining > structural unemployment |
| What factors affect frictional unemployment? | - Provision of job search services > job search time > frictional unemployment - More unemployment benefits > job search time > frictional unemployment |
| What ages refers to youth unemployment? | Youth unemployment refers to those people who are aged 15-19 years, unemployed and actively looking for full-time work |
| What are the consequences of unemployment for a monetary cost? | - Loss of potential output - Loss of skills ? reduce employability - Burden to the working population |
| What are the consequences of unemployment for a non-monetary cost? | - Personal, family and social problems associated with unemployment - Long term unemployment - Welfare dependance |
| What does the labour force participation rate measure? | The labour force participation rate measures the percentage of the working age population - that is, those aged 15 years and over - that is in the labour force |
| The unemployment rate follows the business cycle how? | Rising during economic contractions and recessions and falling during economic expansions and booms |
| What are the four biases that cause changes in the CPI to overstate the true inflation rate? | 1. Substitution rate 2. Increase in quality bias 3. New product bias 4. Outlet bias |
| What does the CPI measure? | The CPI is a measure of the price level, not the inflation rate |
| How is economic growth measured? | Economic growth is measured by the percentage change in real GDP from one year to the next |
| Formula to obtain a real variable? | Divide the nominal variable by a price index and multiply by 100 to obtain a real variable |
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