Chapter 15 Powerpoint

Chapter 15 Powerpoint - Unemployment and Its Natural Rate...

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Unemployment and Its Natural Rate Chapter 15
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Categories of Unemployment The problem of unemployment is usually divided into two categories. The long-run problem and the short-run problem: The natural rate of unemployment The cyclical rate of unemployment
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Natural Rate of Unemployment The natural rate of unemployment is unemployment that does not go away on its own even in the long run. It is the amount of unemployment that the economy normally experiences. (moving) average of unemployment rate
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Cyclical Unemployment Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate. current unemployment – natural rate of unemployment It is associated with with short-term ups and downs of the business cycle.
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0 2 4 6 8 10 12 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 U.S. Unemployment, 1960-2007 Natural rate of unemployment Unemployment rate percentage of labor force
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Describing Unemployment Three Basic Questions: How does government measure the economy’s rate of unemployment? What problems arise in interpreting the unemployment data? How long are the unemployed typically without work?
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How is Unemployment Measured? Unemployment is measured by the Bureau of Labor Statistics (BLS) in U.S. It surveys 60,000 randomly selected households every month. The survey is called the Current Population Survey.
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How is Unemployment Measured? Based on the answers to the survey questions, the BLS places each adult into one of three categories: Employed Unemployed Not in the labor force
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How is Unemployment Measured? The NSO or BLS considers a person an adult if he or she is over 16 years old.
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How is Unemployment Measured? A person is considered employed if he or she has spent most of the previous week working at a paid job. (intention to work?)
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How is Unemployment Measured? A person is unemployed if he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job. (intention to work?)
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How is Unemployment Measured? A person who fits neither of these categories, such as a full-time student, homemaker, or retiree, is not in the labor force . (intention to work?)
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How is Unemployment Measured? The BLS defines the labor force as the sum of the employed and the unemployed.
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How is Unemployment Measured? Tim, who worked, but worked 40 hours last
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Chapter 15 Powerpoint - Unemployment and Its Natural Rate...

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