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Terms in this set (20)Unemployment When a worker is not currently employed is searching for a job without success Used as a measure to see the health of the economy. This is timelier than the GDP because the data is release the first friday of every month. Unemployment rate (u) is the percentage of the labor force that is unemployed. Unemployment rate = (number employed)/(Labor Force) * 100 ... ... Creative Destruction when the introduction of new products and technology leads to the end of other industries and jobs
Structural Unemployment is unemployment caused by changes in the industrial make up (structure) of the economy Dynamic, growing economies led to changes in employment which leads to unemployment for people it is a by-product of growth. ** sign of a healthy growing economy. Reduce the amount: Large amount of Farming jobs but americans just don't want to do them Frictional unemployment Frictional Unemployment is caused by delays in matching available jobs and workers. Occurs even in the healthiest economies Time lags create friction in the labor market and the result is temporary frictional unemployment. 2 Causes of change: Unemployment insurance is a government program that reduces the hardship of joblessness by guaranteeing that unemployed workers receive a percentage of their former income while unemployed **Must have otherwise it will cause a domino effect that will destroy everything if unemployed people had no power to spend...Cushion economic impact Incentives and Unemployment If there are high incentives to stay unemployed like unemployment insurance then people will less likely want to go back to work During the Great Recession Unemployment compensation was extended to 99weeks (nearly 2 years...) Government regulations can slow down the hiring process because there are so many bureaucratic things you must do before you can hire someone as a result people tend to spend a long time hiring so they don't have to fire and rehire Italian government highly pro worker which makes employment hard. resulting in increased amount of frictional unemployment Cyclical unemployment unemployment caused by economic downturns not natural type of unemployment. it means the economy is not healthy Duration of this unemployment is open-ended (no one will know how long it lasts) The natural rate of unemployment the typical rate of unemployment that occurs when the economy is growing normally (no cyclical unemployment) **economists never know what the exact rate of unemployment is but usually around 5% when U=U* (natural rate) that means there is no cyclical unemployment Full employment Output (Y*) is the output level produced in an economy when the unemployment rate is equal to its natural rate Y* is also known as potential GDP or potential output (U=U) then (Y=Y) Healthy Economy Zero Cyclical unemployment because Unemployment (U) is at natural rate (U<U) then (Y > Y) Exceptional expansion This means that the economy is expanding beyond its capabilities. (demand for output might be so high that factories are hiring extra people to meet these demands ...however you cannot keep this in the long run) (U>U) then (Y>Y) Recession Cyclical unemployment is positive. Labor Force people who are already employed or actively seeking work ***If a jobless person is not seeking a job in 4 weeks they are NOT counted in unemployment stats because they are not in the labor force. Who is not included: Historic Unemployment Rate US The rate is usually 6% for unemployment. Usually spikes during recessionary periods because of cyclical unemployment. Structural and frictional unemployment is always positive Discouraged workers those who are not working, have looked for a job in the past 12 months and are not willing to work, but have not sought employment in the past 4 weeks. Underemployed Workers those who have part-time jobs but who prefer to work full-time. Shortcomings of Unemployment 1. Discouraged workers (they are the exceptions because they still want to work BUT...they are discouraged) Labor Force Participation the percentage of the population that is in the labor force Labor Force Participation Rate = (Labor Force) / (Population) *100 Changing demographics in the US --> as the baby boomers retire the labor force participation rate will decrease which will lead to a decrease in people producing GDP and more people spending tax dollars on entitlement programs. What is frictional unemployment give examples of frictional unemployment?Frictional unemployment is the result of voluntary employment transitions within an economy. Frictional unemployment occurs in a growing, stable economy. Workers moving from job to job and new workers entering the workforce contribute to frictional unemployment.
What is an example of frictional unemployment quizlet?What is an example of frictional unemployment? High school or college graduates looking for a job. Fired, or looking for a better job.
What is frictional unemployment?Frictional unemployment is a type of short-term unemployment. Frictional unemployment happens when a person is voluntarily job searching or searching for a new career. Frictional unemployment isn't necessarily a bad thing. In fact, because frictional unemployment is voluntary, it can be a sign of a healthy economy.
Which of the following is an example of frictional?Walking – When we walk on the ground or the floor, it is the frictional force that is responsible for holding our feet to the ground. On slippery surfaces or ice, the friction present is less, which is why we tend to slip on these surfaces.
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What is frictional unemployment give examples of frictional unemployment quizlet?
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