Chapter 05

Chapter 05 - VitalSigns Eachmonth, ;thecostoflivingalso matters S

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Vital Signs  Each month, we chart the course of unemployment as a  measure of the health of economy.  How do we measure unemployment and what other data  do we use to monitor the labor market?  Having a job that pays a decent wage does not  determine the standard of living; the cost of living also  matters.  So we also need to know what the Consumer Price Index  is and how it is measured and used.
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Types of Unemployment People are considered unemployed if they are  (1) not working and  (2) actively seeking a job Economists classify unemployment into four different  categories. Each arises from a different cause and has  different consequences: Frictional unemployment Seasonal unemployment Structural unemployment Cyclical unemployment
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Types of Unemployment ____________ unemployment Short-term Experienced by people who are Between jobs Just entering the labor market Reentering the labor market ____________ unemployment Short-term Related to changes in weather, tourist patterns, or  other seasonal factors
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Types of Unemployment _______________ unemployment Long-term problem Arises from mismatches between workers’ skills and employers’ requirements workers’ locations and employers’ locations _______________ unemployment Arises from changes in production over the business  cycle
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Examples As a large number of students graduate from college,  which category of unemployment would increase? Kara is a construction worker. Because of adverse  weather during the winter, she has been laid off from her  job. She is available for work and has even sought work  with other construction companies. Kara is experiencing  ________ Ruslan has worked as a dishwasher for 15 years but has  been fired because it has become cheaper to use a  dishwashing machine. The only jobs available require  more skills than Ruslan has, and he's been looking for  work unsuccessfully for more than a year. Ruslan is: 
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Unemployment Frictional, structural, and seasonal unemployment arise  largely from ___________economic causes When the economy goes into a recession and total  output falls, the unemployment rate rises Since it arises from conditions in the overall economy,  cyclical unemployment is a problem for  ___________economic policy
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Full Employment Full employment  occurs when there is no cyclical  unemployment or cyclical unemployment equals to zero  The overall unemployment rate at full employment is  greater than zero Frictional, seasonal, and structural unemployment still  exist ______________  output Level of output produced when the economy operates  at full employment
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This note was uploaded on 06/07/2011 for the course ECON 3 taught by Professor Dd during the Spring '11 term at Alvin CC.

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Chapter 05 - VitalSigns Eachmonth, ;thecostoflivingalso matters S

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