ECON EXAM III- Chapter 8

  1. labor force
    sum of employed and unemployed workers
  2. unemployment rate
    percentage of labor force that is employed

    (#unemployed/labor force) x 100
  3. discourage workers
    ppl available for work but haven't looked for a job during the previous four weeks because they believe no jobs are available for them
  4. not in the labor force
    • ppl who dont have a job and who aren't actively looking for a job
    • (retirees, homemakers, full time students, military service, prison, mental hospitals)
  5. labor force participation rate
    • percentage of the working age population in the labor force
    • (labor force/working age population) x 100
  6. frictional unemployment
    short term unemployment that arises from the process of matching workers with jobs
  7. structural unemployment
    unemployment rising from a persistant mismatch between sills and attributes of workers
  8. cyclical unemployment
    caused by a business cycle recession
  9. CPI
    • avg of prices of the g&s purchased by a typical family of four
    • (expenditures in current year/ exp. in base year) x 100
  10. menu costs
    costs to firms of changing prices
  11. an important contributor to the relatively rapid growth of the US economy was the presence of
    high flexibility of the US labor market
  12. this is a problem because there appears to be another expectation of the the role of US households these are likely to lead to a
  13. a highly flexible labor market means that many workers
    do not have job security, expect to be laid off with short notice
  14. under the reagan administration & in the 2000s there was a
    surge in borrowing (mostly from foreigners), federal gvmt ran large budget deficits
  15. percentage of national income for US
  16. percentage of national income tend be higher in
    more developed countries
  17. four expectations for households
    • 1. able to switch jobs without difficult
    • 2. increasingly acquire assets
    • 3. save enough to avoid temp job loss
    • 4. spend heavily to ensure demand to keep US economy growing
  18. situation is made worse
    • 1. health come with employment--unemployment=no healthcare
    • 2. unemployment payments are short lived
  19. during 2000s it was _________ that was largely ignored
    3. need for savings
  20. ___________ is the most important structural issues facing developed economies
    tension between the 4 incompatible expectations
  21. reagan showed that deficits dont matter and it was inconceivable that
    free markets could fail
  22. switching to inflation, economists focus on
    the costs of business having to mark up prices
  23. when the inflation is higher, it is
    much harder to keep track of which goods are relatively cheap
  24. hammer and nail problem seems to have implications
    • 1. impacting our coverage of social problems
    • 2. impacting our understanding of individual behavior&choices
Card Set
ECON EXAM III- Chapter 8