Econ 104 Goffe Quiz 5

what are the 3 main types of unemployment?

frictional, structural, cyclical

frictional unemployment

between jobs/looking for a job

structural unemployment

don't have the skills to match the job requirement

- increasing bc AI is taking low scale jobs

cyclical unemployment

unemployment that occurs due to a change in business cycle

when does cyclical unemployment rise?

during a recession

marginally attached worker

someone who has been looking for a job in the past year but has given up in the past month

is a marginally attached worker considered unemployed/in the labor force?

no

what are the 2 reasons a marginally attached worker may not have looked for a job in the past month?

1. non-economic reasons

2. discouraged

what is considered unemployed?

must not have a job and be actively searching for a job within the last month

natural rate of unemployment

unemployment rate when there is no cyclical unemployment

natural rate of unemployment formula

(frictionally employed + structurally unemployed) / labor force

total unemployment

includes everyone who is unemployed no matter the type of employment

total unemployment formula

(frictionally + structurally + cyclically)

natural unemployment

only includes those who are frictionally and structurally unemployed

is the natural unemployment rate or the total (U3) unemployment rate always higher?

the U3 unemployment rate

potential GDP

GDP when all firms are operating at capacity (sustainable pace with full employment)

if potential GDP = real GDP...

there is no cyclical unemployment

labor force formula

(# of people employed) + (# of people unemployed)

U3 "Headline" Unemployment Rate formula

(# of people unemployed) / labor force

labor force participation rate formula

labor force / pop. age 16+ x100

prime-aged labor force participation rate formula

labor force aged 25-54 / pop. aged 25-54 x100

marginally attached formula

discouraged workers + unemployed with non-economic reasons

U6 "Unemployment" Rate formula

(unemployed + underemployed + marginally attached) / (marginally attached + labor force)

recession

a significant decline in economic activity for a period of time that is most likely to be seen in Real GDP

- a significant, widespread, downturn in economy

"headline" employment is called _____, while ______ is referred to as the "under-employment" rate

U3; U6

The Fed controls ______, and the President and Congress controls _______

monetary policy; fiscal policy

what is the federal funds rate

the interest rate set by the Federal Reserve at which banks lend money to one another for overnight loans

which is larger

underemployment rate

2 multiple choice options

when would we expect to be the closest to the natural rate of unemployment

peak

3 multiple choice options

cynical unemployment is lowest at the ______, and highest at the ________

peak; trough (opposite of natural rate of unemployment)

true or false: the business cycle consists of three phases: expansions, recessions, depressions

false: only expansions and repressions

- depression is just a really bad repression

true or false: potential GDP increases and decreases with movements in the economy

false: potential GDP never decreases

which of the following is an institution?

a courthouse

3 multiple choice options

usually which is larger the number of jobs created or the number of jobs destroyed in a year

created

2 multiple choice options

if a bookkeeper loses their job due to a company's new automatic entry system, and they start looking for a new job right away, what category would they best fit into?

structurally unemployed

2 multiple choice options

what is the correct order?

institutions improve markets which then improve the economy

2 multiple choice options

potential GDP is defined as...

the level of GDP attained when all firms are producing at capacity

true or false: the natural rate of unemployment is a bad measure of the "normal" unemployment rate

false: natural rate = normal rate