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ECON 205 Midterm 2 Review

ECON 205 Midterm 2 Review - ECON 205 Midterm 2 Review...

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ECON 205 Midterm 2 Review Chapter 7: Unemployment, Inflation, and Deflation. UNEMPLOYMENT Unemployment: the total number of adults (aged 16 and older) who are willing and able to work and who are actively looking for work but have not found a job. - Frictional Unemployment: Unemployment due to people searching for jobs - Structural unemployment: Resulting from a poor match of workers abilities and skills with current requirements of employers - Cyclical Unemployment: resulting from business recessions that occur when aggregate demand is insufficient to create full employment - Seasonal Unemployment: resulting from the seasonal pattern of work in specific industries Natural Level of unemployment: Frictional + Seasonal+ Structural Overall Level of Unemployment: Frictional + Seasonal + structural + Cyclical Labor force: Unemployed + Employed, individuals aged 16+ who have jobs or are looking/available for jobs -In 2007= 152.7 million people. In US Adult Population: Labor Force + Not in civilian labor force (students, military, retired, institutionalized) Unemployment Rate: (# of unemployed) / (# of people in labor force) -In 2007=4.8 percent in US SEE CHART Labor Force Participation Rate: ( Labor Force) / (Labor force + military + students+ etc.) or (employed+ unemployed) / (Labor Force + military + students+ etc.) The percentage of noninstitutionalized working age individuals who are employed or seeking unemployment. -66% in 2007 Stock: Refers to the unemployed, a quantity of something, measured at a given point in time Flow: Refers to people departing/ acquiring jobs, a quantity measured per unit of time, something that occurs overtime. Chart , Employed in one circle, unemployed in another circle. Job departures flow from employed to unemployed. Job Acquisitions flow from unemployed to employed. Analysis: Unemployment rate is a constant flow. If more people depart jobs than qcquire them, the unemployment rate rises, vice versa. If both flows are equal,
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then the unemployment rate is stable. Categories of individuals who are without work: ( Accroding to bureau of labor Stats) -Job loser: employment was involuntarily terminated or who was laid off (40- 60% of the unemployed) - Reentrant: Worked a full time job before but has been out of the labor force (20-30% of unemployed) - Job Leaver: voluntarily ended unemployment (less than 10 to around 15% of unemployed) - New Entrant: Never worked a full time job for more than 2 weeks or longer (10-15% of unemployed) Discouraged Workers: individuals who have stopped looked for a job because they are convinced they will not find one, ( Hidden unemployment) Critics of unemployment rate say that the census doesn’t reflect true number of these. Full Employment:
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ECON 205 Midterm 2 Review - ECON 205 Midterm 2 Review...

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