Chapter 8 - chapter: 8 UnemploymentandInflation > 1 of 35...

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1 of 35 chapter: 8 >> Unemployment and Inflation
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2 of 35 WHAT YOU WILL LEARN IN THIS CHAPTER How unemployment is measured and how the unemployment rate is calculated The significance of the unemployment rate for the economy The relationship between the unemployment rate and economic growth The factors that determine the natural rate of unemployment
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3 of 35 Unemployment Rate Employment is the number of people currently employed in the economy, either full time or part time. Unemployment is the number of people who are actively looking for work but aren’t currently employed. The labor force is equal to the sum of employment and unemployment.
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4 of 35 Unemployment Rate The labor force participation rate is the percentage of the population aged 16 or older that is in the labor force. The unemployment rate is the percentage of the total number of people in the labor force who are unemployed.
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5 of 35 Unemployment Rate The U.S. Unemployment Rate, 1948-2008 1948 1960 1970 1980 1990 2000 2008 Year 12% 10 8 6 4 2 Unemployment Rate
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6 of 35 1a*) The labor force is: 1. 100. 2. 96. 3. 90. 4. 60. Full-time employed 60 Not working but looking for work 6 Part-time workers 30 Discouraged workers 4
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7 of 35 1b*) The unemployment rate is: 1. 4%. 2. 6%. 3. 6.25%. 4. 11%. Full-time employed 60 Not working but looking for work 6 Part-time workers 30 Discouraged workers 4
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8 of 35 1a) Suppose the advent of employment websites enables job seekers to find a suitable job more quickly. What effect would this have on the unemployment rate over time? 1. It would cause a reduction in the unemployment rate over time. 2. It would cause an increase in the unemployment rate over time. 3. no effect
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9 of 35 1b) Suppose the advent of employment Web sites causes job seekers who had given up their job search to begin looking again. What effect would this have on the unemployment rate over time? 1. It would cause a reduction in the unemployment rate over time. 2. It would cause an increase in the unemployment rate over time. 3. no effect
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10 of 35 2a) Rosa, an older worker who is laid off and who gave up looking for work months ago. 1. counted as unemployed 2. not counted as unemployed
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11 of 35 2b) Anthony, a schoolteacher who is not working during his three-month summer break. 1. counted as unemployed 2. not counted as unemployed
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12 of 35 2c) Grace, an investment banker who has been laid off and is currently searching for another position. 1. counted as unemployed 2. not counted as unemployed
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13 of 35 2d) Sergio, a classically trained musician who can only find work playing for local parties. 1. counted as unemployed 2. not counted as unemployed
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14 of 35 2e) Natasha, a graduate student who went back to school because jobs were scarce. 1. counted as unemployed 2. not counted as unemployed
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15 of 35 3c) Negative real GDP growth is associated with a fall in the unemployment rate. Is this statement consistent with the observed relationship between growth in real GDP and changes in the unemployment rate?
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This note was uploaded on 10/04/2011 for the course ECON 2006 at Virginia Tech.

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Chapter 8 - chapter: 8 UnemploymentandInflation > 1 of 35...

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