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Econ chapt 9
| Question | Answer |
|---|---|
| Labor Force | the employed + the unemployed |
| Branches of the Labor Force | Employed, Unemployed, Not in the Labor Force (kids, retirees, stay at home moms) |
| Discouraged workers | People available for work but have stopped looking with the belief that all jobs are taken |
| Calculating Unemployment Rate | (unemployed/ labor force) x 100 |
| Calculating Employment Rate | (employed/ labor force) x 100 |
| Calculating Labor Force Participation Rate | (Labor Force/ Working Age population) x 100 |
| Calculating Employment to Population Ratio | (Employed/Working Age population) x 100 |
| Understate Employment | Doesn't include full vs part time Gray area between the unemployed vs Not in labor force |
| Overstate Employment | People with side hustles who claim unemployment to avoid taxes |
| Household Survey | Door to door surveys investigating the employment and unemployment rate |
| Establishment Survey | Pay roll survey; provides information on the total number of people who are employed and on a company pay roll |
| Frictional Unemployment | Short term, matching a worker with another job |
| Structural Unemployment | Long term, worker has to learn a new skill to obtain a job |
| Cyclical Unemployment | workers who got laid off due to a recession |
| Full Employment | When employment is at full capacity and there is only frictional and structural unemployment |
| Unemployment Insurance Payment | Payments the unemployed receive from the Gov't The reduced spending of the unemployed further impacts the economy |
| Labor Unions | Organizations of workers that bargain with employers for higher wages and better working conditions Unionized industries give above market wages but hire less workers and increasing competition |
| Efficiency Wages | Firms who pay above market wages to workers to increase productivity |
| Consumer Price Index (CPI) | measures the avg price a typical urban family of four pays for the g's & s's they purchase aka cost of living index |
| Calculating CPI | Expenditures in the current year/ Expenditures in the base year x 100 |
| CPI Calculations Include | 1) Basket goods 2) Cost in the base year 3) Prices in the current |
| Basket of Goods | What people spend their $ on |
| Calculating Inflation Rate | (Real year CPI -Base year CPI)/Base year CPI x 100 |
| 4 Biases that lead to the inflation rate to be overstated | Substitution: belief that consumer buy the same amount of each product in the market basket Increase in Quality: Belief that the increase in price = increase of quality New Product: Market of basket goods Outlet: where consumers buy their products |
| Producer Price Index (PPI) | Avg prices that producers spend to make products Gives early warnings of future CPI prices |
| Calculating PPI | $ in current year = $ base year x (CPI current yr/ CPI base yr) |
Created by:
seyseyHU