ECON 1BB3 Lecture Notes - Lecture 7: Structural Unemployment, Starbucks, Underemployment

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tealfox142

23 Feb 2016

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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Statistics canada divides the non-institutional adult population into three categories: employed, unemployed, not in the labour force. The employed and unemployed make up the labour force. Adult population - 15 years+ excludes people in prison, long term care facilities, the military. Unemployment rate = (# of unemployed/ labour force) * 100. Labour force participation rate (lfpr) = (labour force/ adult population) *100. Employment rate = (# of employed/adult population) * 100. Tara has just finished school, but she is going to roam around the country awhile before she starts looking for work. As a result, the unemployment rate is unaffected, and the labour force participation rate is unaffected because she is not looking for work. If someone is only working a few hours a wekk when they want more a: people working at jobs below their skill level (ba working at a starbucks) To be qualified for ei (employment insurance) you must be actively searching for job.

Related Questions

1.Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Select one: a. 75-80 % b. 40-50 % c. 20-30 % d. 10-20 %

2.Suppose there are 100 million in the labor force, and 6 million unemployed people.

During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Select one:

a. 100.1 million; 5.8 percent.

b. 93.9 million; 6.1 percent.

c. 94.1 million; 5.9 percent.

d. 100 million; 6.1 percent.

3.In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

Select one:

a. 70 percent.

b. 40 percent.

c. 57 percent.

d. an undetermined amount given the lack of information.

4.The population of individuals at least 16 years of age can be broken into 3 groups. They are

Select one:

a. those working in the for-profit sector, those working in the nonprofit sector, and unemployed individuals.

b. the unemployed, discouraged workers, and retirees.

c. those employed full-time, those employed only part-time, and the unemployed.

d. None of these.

5.During the Great Depression,

Select one:

An a. most people who couldn't find work left the labor force, so the official unemployment rate remained low.

b. the U.S. unemployment rate reached its historical highest.

c. unemployment statistics were not collected.

d. the unemployment rate was not unusually high, but wage levels were low.

6.The term "market basket" means a

Select one:

a. collection of goods that changes every year and is defined by Congress.

b. collection of goods that can fit into an average shopping cart.

c. collection of goods that is used by a typical family.

d. collection of goods that are purchased during the holiday season.

7.A price index is the

Select one:

a. cost of a market basket of goods today.

b. cost of a market basket of goods and services a year ago is expressed as a percentage of the cost of the same market basket today.

c. year that is chosen as the point of reference for comparison of prices in other years.

d. cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year.

8.Which of the following does NOT cause a rightward shift in the supply curve?

Select one:

a. a reduction in resource costs

b. an increase in technology

c. a reduction in the expected future price of the good

d. a reduction in the price of the good

9.Which of the following is a possible outcome of setting a legal maximum rental rate below the market-clearing rental rate?

Select one:

a. a decrease in the quantity of rental housing demanded

b. an increase in the quantity of rental housing supply

c. a black market in rental housing

d. a surplus of rental housing

10.Rent controls primarily benefit

Select one:

a. people looking for rental units.

b. builders.

c. property owners.

d. people who already occupy rental units.

11.Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market-clearing price?

Select one:

a. Consumers, who purchase more units of the product than they did before the price support program was implemented

b. Taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place

c. The government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

d. Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues

coffeemarten394

Part 1:
Define each one as either employed, unemployed, not in the labor force, not in the adult population.

1) Felix is a 25-year-old professional tennis player. When he's not competing, he works as a coach at a local tennis club.
2) Janis is a 12-year-old student in Middle School. She babysitter younger brother and does other chores, for which her parents give her an allowance of $30 per week.
3) Rajiv is a 30-year-old who lost his job as a copyeditor for a local newspaper. He has spent the past few weeks out of work interviewing for other editing jobs. If his job search doesn'tsucceed after a few more weeks, he is thinking about going back to grad school.
4) Meagan is an 18-year-old who just graduated from high school. She is taking it easy this summer, relaxing by the pool with her friends, and volunteering part-time at a nursery.

Part 2:
The table below contains U.S. employment information from February 2008.
Civil Non-Institutional Population (16 years andolder)=232,809,00
Employed=145,993,000
Unemployed=7,318,000
Discouraged=396,000

The BLS has several measures of joblessness in addition to the official unemployment rate. One alternative in the U-4 measure of labor underutilized, which is calculated at the following:
U-4=(unemployed+discouraged)/(Labor force+discouraged)*100

Official Unemployment Rate=?
The U-4 measure of Labor underutilized=?

Part 3(connected to part 2):
The official unemployment rate and the U-4 measure of laborunderutilized are 2 different measures of joblessness in the economy. If the BLS were to include discouraged workers in the official unemployment rate, the reported unemployment rate would(increase/decrease).

Part 4:
Frictional Unemployment: 1.0%
Cyclical Unemployment: 0.8%
Structural Unemployment: 4.1%
Total Unemployment: 5.9%
Using the table above: True or False. The economy is currently at its natural rate of unemployment?

Part 5:
Define as either Structural, Frictional, or CyclicalUnemployment

1) Automobile demand as fallen during a recent recession, and Haley has been laid off from her job on the assembly line (I think it's cyclical but I'm not too sure)
2) Jack recently lost his job as a waiter at a local restaurant. A recent increase in minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job but reconsidering going back to school for vocational rate. (I think it's structural but not sure)

Part 6:
Suppose the world price of steel falls substantially. The demand for labor among steel production firms in Pennsylvania(increase/decrease). The labor demand among automobile producing firms in Michigan, for which steel is an input, will(increase/decrease). The unemployment resulting from such sectional shift in the economy is best described as(cyclical/structural/frictional/seasonal) unemployment.

I think it's decrease, decrease, and cyclical but not too sure.

Part 7:
Which of the following policies would reduce the natural rate of unemployment in the economy. More than one can apply.

1) An improvement to a widely used job-search website that allows it to match works to job vacancies more effectively.
2) Establishing government-run employment agencies to connect unemployed workers to job vacancies.
3) Offering recipients of unemployment insurance a cash bonus if they find a new job within a specified number of weeks

plumdog25

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following activities is either not accounted for or are measured inaccurately in calculations of GDP for the United States? Check all that apply.

-Funds spent by city governments to renovate their buildings

-The costs of air and water pollution

-The Brazilian wood that is used for flooring in a new U.S. house

-The leisure time enjoyed by Americans

-The value produced by doing your own laundry

2.

Consider a small economy composed of six people: Clancy, Eileen, Hubert, Kate, Poornima, and Manuel. Each person's employment status is described in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person's status as employed, unemployed, not in the labor force, if not in the civilian labor force but still part of the adult population, or not in the adult population if not in the civilian adult population.

Person	Status
-Clancy is a 20-year-old professional tennis player. When he's not competing, he works as a coach at a local tennis club.
-Eileen is a 36-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.
-Hubert is a 79-year-old retired professor. He enjoys volunteering at the local public library.
-Poornima is a 29-year-old who lost her job as an associate producer for a radio station. After spending a few weeks out of work and interviewing for several other positions, she gave up on her job search and decided to go back to grad school. She made that decision a few months ago.
-Manuel is a famous novelist. He is spending the summer at his lake house in upstate New York, doing a little writing each day but mostly spending his time gardening and reading.
-Kate is an 11-year-old student at East Valley Middle School. She baby-sits her younger brother and does other chores for which her parents give her an allowance of $30 per week.

Initially, Ana earns a salary of $300 per year and Yakov earns a salary of $200 per year. Ana lends Yakov $100 for one year at an annual interest rate of 16% with the expectation that the rate of inflation will be 12% during the one-year life of the loan. At the end of the year, Yakov makes good on the loan by paying Ana $116. Consider how the loan repayment affects Ana and Yakov under the following scenarios.

Scenario 1: Suppose all prices and salaries rise by 12% (as expected) over the course of the year. In the following table, find Ana's and Yakov's new salaries after the 12% increase, and then calculate the $116 payment as a percentage of their new salaries. (Hint: Remember that Ana's salary is her income from work and that it does not include the loan payment from Yakov.)

- Value of Ana's new salary after one year?

-The $116 payment as a percentage of Ana's new salary?

-Value of Yakov's new salary after one year

-The $116 payment as a percentage of Yakov's new salary

Scenario 2: Consider an unanticipated decrease in the rate of inflation. The rise in prices and salaries turns out to be 2% over the course of the year rather than 12%. In the following table, find Ana's and Yakov's new salaries after the 2% increase, and then calculate the $116 payment as a percentage of their new salaries.

-Value of Ana's new salary after one year

-The $116 payment as a percentage of Ana's new salary

-Value of Yakov's new salary after one year

-The $116 payment as a percentage of Yakov's new salary

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ECON 1BB3 Lecture Notes - Lecture 7: Structural Unemployment, Starbucks, Underemployment

ECON 1BB3 Full Course Notes

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