Number of civilians at least 16 years willing and able to work who have been trying to find a job within the prior four weeks.
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what does the cost of unemployment include
loss of output and pyschological impact
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labor force
the total number of workers, including both the employed and the unemployed
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Civillian non-institutional population
non military and prisoned people employed and unemployed
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marginally attached workers
would like to be employed and have looked for a job in the recent past but are not currently looking for work
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Underemployment
individuals who are unemployed, part time, or marginally attached
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unemployment rate
unemployed/labor force * 100
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labor force participation rate
(labor force/adult population) * 100
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Labor Force Marginally Attached (LFMA)
labor force + marginally attached
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underemployment rate
(Underemployed/LFMA) x 100
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employment population ratio
(employed/non institutionalized labor pop) x 100
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frictional unemployment
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
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cyclical unemployment
unemployment caused by a business cycle recession
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structural unemployment
unemployment that occurs when workers' skills do not match the jobs that are available
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seasonal unemployment
unemployment caused by seasonal changes in the demand for certain kinds of labor
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full employment
the condition in which virtually all who are able and willing to work are employed.
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natural rate of unemployment
The rate of unemployment that is estimated to prevail in long-run, when all workers and employers have fully adjusted to any changes in the economy.
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Inflation
A continuous rise in the price of goods and services
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Deflation
a decrease in the general level of prices
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baskets of goods and services
Representation of consumer spending used to track changes in price over time
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purchasing power
the value of money for buying goods and services
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price index
(Market basket cost)/(basket cost in base year)
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inflation rate
(Price index in year 2 - price index in year 1)/(Price index in year 1) x 100
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nominal value
the face value of an amount of money
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real value
the value of an amount of money in terms of what it can buy
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anticipated inflation
inflation that is expected to occur
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unexpected inflation
inflation that occurs as a result of an unexpected event increases demand for goods and services beyond what can be met by producers, causing prices to rise faster than expected
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nominal interest rate
the rate of interest expressed in today's dollars
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real rate of interest
The nominal rate of interest minus the anticipated rate of inflation.
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Gross Domestic Product (GDP)
A measurement of the total goods and services produced within a country.
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expansion
A period of economic growth as measured by a rise in real GDP for 2 quarters
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contraction
a period of economic decline during which trade and industrial activity are reduced
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Recession
A period of economic decline as measured by a fall in real GDP for 2 quarters
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Depression
a period of sustained economic decline
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Costs of negative economic growth
-Lost Output -Possible Higher Unemployment Rates
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value added approach
measuring GDP by summing the values added by all firms in the economy
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Limitations of GDP
GDP excludes non-market production Different countries have different legal versus illegal activities Quality of life is not measured GDP poorly measures a nation's well-being Does not discuss distribution of income
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national income accounting
A measurement system used to estimate national income and its components
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Expenditure Approach
A way of computing national income by adding up the dollar value at current market prices of all final goods and services
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GDP Expenditure Approach
GDP = C + I + G + (X-M)
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consumption(c)
includes durables, nondurables, and services
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GPDI(I)
the creation of capital goods that can yield production in the future
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Government Expenditure(G)
State, local, and federal expenditures
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Next Exports(NX)
EXPORTS -IMPORTS
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Income Approach
A way of measuring national income by adding up income received by all factors of production
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NDP
GDP - depreciation
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indirect business taxes
transfers + net US income abroad + other business income adjustments
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income approach GDP formula
w+r+i+p+dep+IBT
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nominal values
Measurements in terms of the actual market prices at which goods are sold
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real values
Measurements after adjustments have been made for changes in the average of prices between years; expressed in constant dollars
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Economic Growth Rate
the rate of change in real GDP between two time periods
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Real GDP per capita
real GDP divided by the total population
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Long-Run Economic Growth
the process by which rising productivity increases the average standard of living
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Rule of 70
70/growth rate=doubling time
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potential gdp
the level of real GDP attained when all firms are operating at capacity
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New Real GDP formula
old real gdp*(1+growthrate)^n
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five keys to economic growth
increase number of resources increase productivity saving human capital technology
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Flashcard (33)