Economics Chapter 20 Study Guide

Economics Chapter - Economics Chapter 20 Study Guide 1 Introduction a The misery index adds together the inflation rate and the unemployment rate

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Economics Chapter 20 Study Guide 1) Introduction a) The misery index adds together the inflation rate and the unemployment rate to give a rough measure of the state of the economy. 2) Measuring the Unemployment Rate and the Labor Force Participation Rate a) The unemployment rate affects presidential elections and the stock market b) The Household Survey i) Each month the U.S Bureau of the Census conducts the Current Population Survey (household survey) to collect data needed to compute the unemployment rate. ii) People are considered unemployed if they did not work in the previous week, but were available for work and had actively looked for work at some time during the previous four weeks. iii) The labor force is the sum of the employed and the unemployed. iv) The unemployment rate is the percentage of the labor force that is unemployed. (1) Number of unemployed/labor force x 100= unemployment rate v) People who do not have a job and who are not actively looking for a job are not in the labor force. (1) Ex: retirees, homemakers, full-time students, military service. vi) Discouraged workers are people who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them. vii) The labor force participation rate is the percentage of the working age population in the working force. (1) Labor force/working-age population x 100 c) Problems with Measuring the Unemployment Rate i) It is difficult to distinguish between the unemployed and people who are not in the labor force. ii) Some people say they are unemployed but are not actually actively seeking a job. iii) The unemployment rate provides some useful information about the employment situation in the country but it is far from an exact measure. d) Trends in labor Force Participation i) The higher the labor force participation rate, the more labor will be available and the higher a country’s levels of GDP and GDP per person. ii) The labor force participation rate of adult males has fallen over the past 50 years. iii) The labor force participation for women has increased over the past 50 years. e) Making the Connection (What Explains the increase in Kramer’s) i) Nonworking men engage in leisure activities just like Kramer in the show Seinfeld f) Unemployment Rates for Demographic Groups
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i) The unemployment rate of black adults is more than twice tat of white adults and the unemployment rate of black teenagers is more than twice that of white teenagers. (1) Note: Hispanic may be of any race. g) How Long are People Usually Unemployed? i) Except in severe recessions, the typical person who loses a job finds another one or is recalled to a previous job within a few months. h) The Establishment Survey: Another Measure of Employment
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This note was uploaded on 04/09/2008 for the course ECON 001 taught by Professor Caseyquinn during the Spring '08 term at Lehigh University .

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Economics Chapter - Economics Chapter 20 Study Guide 1 Introduction a The misery index adds together the inflation rate and the unemployment rate

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