econ study guide

econ study guide - Econ Study Guide Exam # 2 Chapter 7...

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Econ Study Guide Exam # 2 Chapter 7 – Unemployment Unemployment: The total adults willing and able to work and are trying to find a job. Costs : Lost output, person psychological impact Labor Force : anyone sixteen and up who have a job or looking for one, unemployed + employed Unemployment rate = unemployed/labor force X 100 Categories = job loser, reentrant, job leaver, new entrant….1/3 in one month, next 1/3 in 2 nd month, 1/6 after six months. Discouraged workers: Peeps who stopped lookin for work, cuz they think they cant get any Labor Force Participation Rate = labor force/adult pop X 100 Types of Unemployment : frictional(between jobs), structural(workers skills vs. job needs), ciclycal(no work do to an economy wide recession), seasonal(ski resorts). Full Employment : level of unemployment that corresponds to normal friction in labor market. What is normally acceptable = 5-6%. Natural Rate of Unemployment : rate that is estimated to succeed in the long run when firms have adjusted to changes in the economy. Seasonally adjusted unemployment only takes into account frictional and structural unemployment. Inflation
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Inflation : upward movement in the average level of prices, Deflation : downward movement in the average level of prices. Purchasing Power : If inflation goes up, money value goes down. If deflation, money value goes up. Measuring Inflation: Price Index = cost of todays market basket/cost of market basket in past year X 100 Real World Price Indexes : Consumer Price Index(CPI), Producer Price Index(PPI), GDP Deflator Inflation Contd…. Nominal Value : Price expressed in todays dollars(Price Now) Real Value : Value expressed in purchasing power Anticipated Inflation vs. Unanticipated Inflation - effect on individuals depends on which exists. Unanticipated positive inflation: creditors lose, debtors gain Nominal rate of Interest : market value of interest in todays dollars Real Rate of Interest : nominal rate minus the anticipated rate of inflation: nom- expected= real COLA’s : cost of living adjustments, clauses in contracts that give raises for a rise in inflation. Business Fluctuations Business Fluctuations - Ups and downs in overall business economic activity(Growth, employment, price level) Types : Expansion, Contraction, Recession, Depression Chapter 8-
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Economy’s Model National Income Accounting: Measurement system used to estimate national income and its components. In every economic exchange, seller receives the same that the buyer spends.
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econ study guide - Econ Study Guide Exam # 2 Chapter 7...

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