Ecoment - Unemployment & GDP

Who is part of the civilian labor force?

people who can and are willing to work

Who is excluded from the civilian labor force?

• people under 16

• retired people

• institutionalized people (ex: prison)

• members of the armed forces

What is unemployment?

the number of people who are unemployed divided by the civilian labor force (x100)

What is the current unemployment rate in the U.S?

4.4%

What is the natural rate of increase?

the accepted unemployment rate in a country

(U.S → 4.4 - 4.5%)

What is outsourcing?

work done for a company by another company/people who are not part of the original company

What is automation?

the use of machines rather than humans

What is underemployment?

people who have jobs but are not getting enough hours

What is seasonal employment?

a job that lasts 6 months or less and starts/ends at the same time every year

What are the three types of unemployment?

(1) Cyclical Unemployment → unemployment resulting from changes of the economy

(ex: slow economy = lose job)

(2) Structural Unemployment → unemployment resulting from the changing needs of the economy

(ex: coal miners)
(3) Frictional Unemployment → temporary unemployment during job transitions

What are some impacts of unemployment on people?

loss of skills, loss of self-respect, poverty, loss of hope, mental challenges, family disintegration

What is GDP?

the total dollar value of all products and services produced within a country’s border in a year

What percent growth of GDP reflects a good economy?

3% or higher per year

What percent growth of GDP reflects a slowing or shrinking economy?

below 3% (slow)

less than 0% (shrinking)

What are five things that the economy needs to grow?

• strong property rights and parents to protect people’s work and ideas

• effective financial institutions (banks dealing with people’s money with trust)

• free trade

• literacy and education to create new ideas

• positive attitude towards competition

What things does GDP not consider?

• the type of products made

• how the wealth is distributed

• people’s leisure time

• informal businesses

• sustainability

(the total value is all that matters; the greater the better)

What GDP and unemployment rates reflect a good economy?

high GDP & low unemployment

What GDP and unemployment rates reflect a bad economy?

low GDP & high unemployment

What is the business cycle?

shows that cycle that the economy follows and the 5 stages - peak, trough, contraction, expansion

What is a recession?

two consecutive quarters (6 months) of contraction (decline in economic activities)

Who decides if the economy is experiencing recession?

the National Bureau of Economic Research

What are some causes of recession?

international crisis, oil prices, weather (natural disasters), pandemic/disease, lack of innovation, government, stock market