ECON-102 Chapter Notes - Chapter 9: Janet Yellen, Relative Price, Capital Outflow

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11 Mar 2017

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Chapter 9 – not on October midterm

Employment and Unemployment

An employed person is one who had a job during the reference month. An

unemployed person is one who did not have a job during the past month but was

seeking employment.

Employed + Unemployed = Labour Force

Unemployment is understated – not everyone who is unemployed is actively

seeking a job postion.

Unemployment Rate = (Unemployed / Labour force)

Employment Rate = (Employed / Population)

Population based off 15+ years of age or older

None of these will measure people who are under-employed or the person who is

looking for full time work but is only able to find part time employment.

Participation rate = (Labour Force / Population)

Population again being 15+ years of age

High unemployment rates might push other members of the family to seek

employment.

High unemployment rates may encourage people to leave the labour force (leave

labour force = unemployed and not looking for work)

Least skilled & Least educated - - people realizing that people who have a higher

education or possess more skills are getting hired

Types of unemployment

Demand Deficient Unemployment

Not enough demand

Frictional Unemployment (Job Search Unemployment)

Lost a job now youre looking for a job

Seasonal Unemployment

Structural Unemployment

Typically there is not a shortage of jobs but a mismatch of jobs and workers. This

mismatch has two components:

The occupational dimension: as consumer tastes change or there are breakthroughs

in technology, workers may become unemployed.

The geographic dimension: people may go to where the jobs are.

Insurance (EI) Induced Unemployment

Choosing to live off EI rather then seek employment

If the program is lucrative people may refrain from retraining themselves for a

different position.

Work leisure decision

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Minimum wage as a price floor – instilling a higher minimum wage can lead to a

higher unemployment rate.

Efficiency wages – above average wages paid to workers

Worker/ Family welfare / Health

Lower worker turn over

Worker effort

Worker quality

End of Chapter 9  now going to chapter 8

Savings, Investment, & Financial System

GPD = C + Ig + G + X – m

Assume a closed economy

GDP = Y (Income)

Y = C + Ig + G and in turn that would mean:

Y – C – G = Ig

where Y – C – G = S (Savings)

Therefore, S = Ig = Savings = Investment in equilibrium

Oct 13, 2016

Y= C + IG + G  closed economy

And, Y – C – G = IG

Where, Y – C – G = Savings

Therefore S = IG, Savings = Investment at Equilibrium

If taxes are included:

S= (Y – T – C) + (T - G)

Where, Y – T – C = Private savings

And, T – G = Public savings

If T – G > 0 Budget Surplus

If T – G < 0 Budget Deficit

T - G = 0 Balanced budget

risk – how risky of a loan is this. Higher risk = higher interest rate or less likely you

will be to get the loan.

Investment + Government spending + Exports = Savings + Taxes + Imports

Sources of Investment funds for business:

Retained earnings

Debt capital (corporation borrowing money)

Equity capital (ownership/stocks)

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Selling stocks: Capital appreciation or dividends

Foreign investment

Bonds – essentially an I O U

Factors influencing the level of investment include:

Interest rates

Changes in technology

Government policies and taxes

Expectations

Replacement of equipment

Cost of capital goods (keeping business running & alive)

GDP – as GDP rises so does investment  economy is doing well so there is more

money to be spent

Savings

Tax laws to encourage savings

Increased savings up, the available money to loan is up. If the supply of money goes

up it will decrease the interest rates. As interest rates drop, it will encourage more

people to borrow money. As borrowing increases, investments also increase. As

investments go up, productivity goes up.

Investment Tax Credits

Money borrowed goes up, then investments will go up, productivity will go up.

Money borrowed goes up, investment rates increase*, encourages people to save &

savings go up.

*amount of money being borrowed going up makes it more expensive to borrow the

money, but business is getting a credit out of it.

Budget Deficit versus Budget Surplus

Deficit up brings borrowing up, it will pull interest rates up and put downward

pressure on investment.

Private investment is crowded out by public borrowing.

Surplus up, borrowing goes down, interest rates will go down, and investment will

go up.

Recession: two consecutive quarters of 0 or negative growth GDP shrunk or didnt

grow)

Fund with government spending with debt rather than use tax dollars.

Negative aspects of debt: borrowing and spending puts upward pressure on prices.

Number one reason for inflation: demand pull inflation. Debt is about current

consumption – if personal consumption goes up you are better off & your well being

goes up. Borrowing for current consumption but not paying it back, it goes on to

younger generations to be paid back.

Income redistribution can come with debt. Rich get richer, people can afford the

bonds will benefit off the interest collected while purchasing them.

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Document Summary

An employed person is one who had a job during the reference month. An unemployed person is one who did not have a job during the past month but was seeking employment. Unemployment is understated not everyone who is unemployed is actively seeking a job postion. Population based off 15+ years of age or older. None of these will measure people who are (cid:498)under-employed(cid:499) or the person who is looking for full time work but is only able to find part time employment. High unemployment rates might push other members of the family to seek employment. High unemployment rates may encourage people to leave the labour force (leave labour force = unemployed and not looking for work) Least skilled & least educated - - people realizing that people who have a higher education or possess more skills are getting hired. Lost a job now you(cid:495)re looking for a job.

Related Questions

1) The working-age population includes

A) those in jails and hospitals.

B) youngsters between the ages of 14 and 16 if they are working at least part time.

C) employed and unemployed people over the age of 16.

D) only employed people over the age of 16.

E) people over the age of 16 who are in the Army.

2) The labor force includes people who

i.are less than 16 years of age.

ii.are in institutions.

iii.are actively seeking a job but do not have a job.

A) i only

B) i and iii

C) i and ii

D) iii only

E) i , ii, and iii

3) Assume the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the size of the labor force?

A) 275 million

B) 141 million

C) 135 million

D) 210 million

E) 204 million

4) The unemployment rate is the number of people unemployed divided by the

A) population, then multiplied by 100.

B) labor force participation rate, then multiplied by the population.

C) labor force, then multiplied by 100.

D) number of people employed, then multiplied by 100.

E) working-age population, then multiplied by 100.

5) Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million, and the working-age population is 175 million people. What is the unemployment rate?

A) 9.0 percent

B) 13.3 percent

C) 11.4 percent

D) 15.4 percent

E) 20 percent

6) Suppose the working-age population is 220 million, the labor force is 150 million, and the unemployment rate is 10 percent. The number of unemployed people is

A) 15 million.

B) 22 million.

C) 37 million.

D) 7 million.

E) 70 million.

7) The labor force participation rate is the

A) labor force divided by the working-age population, then multiplied by 100.

B) number of people employed divided by the labor force, then multiplied by 100.

C) labor force divided by the population, then multiplied by 100.

D) discouraged workers divided by the labor force, then multiplied by 100.

E) number of people employed divided by the population, then multiplied by 100.

8) If the number of employed people is 150 million, the number of unemployed people is 50 million, and the working-age population equals 285 million people, the labor force participation rate is

A) 70.2 percent.

B) 81 percent.

C) 17.5 percent.

D) 25 percent.

E) 52.6 percent.

9) A discouraged worker is

A) a person who is not happy with his or her job.

B) someone who works part time but wants full-time work.

C) someone who is asked to work overtime everyday.

D) someone who does not have a job but has given up looking.

E) another name for an unemployed worker.

coppermarten219

1) The working-age population includes

A) those in jails and hospitals.

B) youngsters between the ages of 14 and 16 if they are working at least part time.

C) employed and unemployed people over the age of 16.

D) only employed people over the age of 16.

E) people over the age of 16 who are in the Army.

2) The labor force includes people who

i. are less than 16 years of age.

ii. are in institutions.

iii. are actively seeking a job but do not have a job.

A) i only

B) i and iii

C) i and ii

D) iii only

E) i , ii, and iii

3) Assume the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the size of the labor force?

A) 275 million

B) 141 million

C) 135 million

D) 210 million

E) 204 million

4) The unemployment rate is the number of people unemployed divided by the

A) population, then multiplied by 100.

B) labor force participation rate, then multiplied by the population.

C) labor force, then multiplied by 100.

D) number of people employed, then multiplied by 100.

E) working-age population, then multiplied by 100.

A) 9.0 percent

B) 13.3 percent

C) 11.4 percent

D) 15.4 percent

E) 20 percent

6) Suppose the working-age population is 220 million, the labor force is 150 million, and the unemployment rate is 10 percent. The number of unemployed people is

A) 15 million.

B) 22 million.

C) 37 million.

D) 7 million.

E) 70 million.

7) The labor force participation rate is the

A) labor force divided by the working-age population, then multiplied by 100.

B) number of people employed divided by the labor force, then multiplied by 100.

C) labor force divided by the population, then multiplied by 100.

D) discouraged workers divided by the labor force, then multiplied by 100.

E) number of people employed divided by the population, then multiplied by 100.

8) If the number of employed people is 150 million, the number of unemployed people is 50 million, and the working-age population equals 285 million people, the labor force participation rate is

A) 70.2 percent.

B) 81 percent.

C) 17.5 percent.

D) 25 percent.

E) 52.6 percent.

9) A discouraged worker is

A) a person who is not happy with his or her job.

B) someone who works part time but wants full-time work.

C) someone who is asked to work overtime everyday.

D) someone who does not have a job but has given up looking.

E) another name for an unemployed worker.

silvergnu415

QUESTION 1

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

		frictionally unemployed.
		cyclically unemployed.
		a discouraged worker.
		seasonally unemployed.

1 points

QUESTION 2

Discouraged workers

		are counted as unemployed workers when the unemployment rate is calculated.
		would decrease the unemployment rate if they were added to the number of unemployed workers.
		are counted as one-half of a worker in the unemployment statistics.
		would increase unemployment rate if they were added to the number of unemployed workers.

1 points

QUESTION 3

In measuring the unemployment rate, part-time workers are ________ and discouraged workers are ________.

		included as employed; included as unemployed
		excluded; excluded
		excluded; included as unemployed
		included as employed; excluded

1 points

QUESTION 4

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as

		frictional.
		cyclical.
		structural.
		seasonal.

1 points

QUESTION 5

When a golf caddy in Minnesota (where golf courses close in the winter) is unemployed in December, it is most likely the case that the golf caddy is

		cyclically unemployed during long droughts.
		frictionally unemployed during spring and summer.
		structurally unemployed during spring and summer.
		seasonally unemployed.

1 points

QUESTION 6

After graduating from college, Yunis, age 22, started working for his parent's real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units . In the Current Population Survey, Yunis is considered

		part of the labor force and employed.
		part of the labor force and unemployed.
		a discouraged worker.
		not part of the labor force.

1 points

QUESTION 7

The working-age population includes

		youngsters between the ages of 14 and 16 if they are working at least part time.
		only employed people over the age of 16.
		those in jails and hospitals.
		employed and unemployed people over the age of 16.

1 points

QUESTION 8

Involuntary part-time workers are workers who

		work less than 35 hours but would like to work full time.
		work more than 35 hours but would like to work less than 35 hours.
		work less than 35 hours by choice.
		work have lost their jobs within the last four weeks and are seeking another job.

1 points

QUESTION 9

Frictional unemployment is the result of

		the normal process of jobs being created and destroyed.
		an economic recession.
		people not getting along (having friction) with their employers.
		the economic decline of major industries

1 points

QUESTION 10

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

		not in the labor force.
		cyclically unemployed.
		frictionally unemployed.
		structurally unemployed.

1 points

QUESTION 11

Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered

		an involuntary part-time worker.
		a marginally attached worker.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 12

Discouraged workers who are over 16 years old are

i.not counted as unemployed.

ii.part of the working-age population.

iii.part of the labor force.

		i and ii
		ii and iii
		ii only
		i only

1 points

QUESTION 13

Higher unemployment benefits create

		higher seasonal unemployment as workers switch jobs.
		a lower number of job leavers.
		incentives for longer job searches and higher frictional unemployment.
		incentives for shorter job searches and higher structural unemployment.

1 points

QUESTION 14

Seasonal unemployment includes people who become unemployed from

		changes in the business cycle.
		technological changes.
		the seasonal weather patterns.
		normal changes in the labor force.

1 points

QUESTION 15

Cyclical unemployment is

		higher when the economy is expanding.
		always greater than the total of structural and frictional unemployment.
		the total of structural and frictional unemployment.
		created by a recession.

1 points

QUESTION 16

Which of the following people would be classified as employed in the Current Population Survey?

		April, who just graduated from college and is looking for work
		Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
		Rich, who is working 20 hours a week but wants a full-time job
		Misty, who just quit her job to return full time to school

1 points

QUESTION 17

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

		discouraged workers.
		involuntarily unemployed.
		part-time lookers.
		unemployed workers.

1 points

QUESTION 18

Discouraged workers are included in the calculation of the

i.unemployment rate.

ii.labor force participation rate.

iii.working-age population.

		i and ii
		i only
		iii only
		ii only

1 points

QUESTION 19

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

		changes in the business cycle.
		cyclical unemployment.
		frictional unemployment.
		structural unemployment.

1 points

QUESTION 20

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

		64 percent
		67 percent
		76 percent
		49 percent

1 points

QUESTION 21

During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.

		rises; rises
		rises; does not change
		falls; rises
		rises; falls

1 points

QUESTION 22

In January of 2001, the population of the United States was 276.8 million, the working-age population was 210.2 million, the total number of people employed was 140, and the total number of people unemployed was 5.0 million. What was the labor force participation rate?

		56 percent
		69 percent
		78 percent
		67 percent

1 points

QUESTION 23

If Brian, age 24, had no job but was available for work and had looked for a job the week before the survey, Brian is classified in the Current Population Survey as

		unemployed.
		employed.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 24

Julie works part-time for economic reasons. She would be considered

		an involuntary part-time worker.
		not in the labor force.
		a job seeker.
		a discouraged worker.

1 points

QUESTION 25

Suppose the population is 300 million people, the labor force is 200 million people, the number of people employed is 185 million, and the working-age population is 170 million people. What is the unemployment rate?

		5 percent
		7.5 percent
		8.8 percent
		92.5 percent

1 points

ECON-102 Chapter Notes - Chapter 9: Janet Yellen, Relative Price, Capital Outflow

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