Term
| In the long - run the US experience _______ ________ |
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Definition
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Term
| In the short-run there are _______ in the economy |
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Definition
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Term
| What is a business cycle? |
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Definition
| reoccurring increases and decreases in the level of the economic activity over time |
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Term
| The 4 phases of a business cycle in order |
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Definition
| Peak, recession, trough, expansion |
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Term
| 3 causes of business cycles |
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Definition
1. demand shocks
2. supply shocks
3. prices are "sticky" |
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Term
| Are durable goods affected the most or the least by a business cycle? |
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Definition
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Term
| Examples of durable goods |
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Definition
- capital goods (houses, plants, etc)
- consumer durables (cars, appliances, etc) |
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Term
| Are nondurable goods affected the most or the least by a business cycle? |
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Definition
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Term
| Examples of nondurable goods |
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Definition
- services (haircuts, etc)
- food and clothing |
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Term
| What mainly caused The Great Recession? |
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Definition
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Term
| What caused the Great Depression? |
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Definition
| decreased in demand and supply |
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Term
| Who produces the unemployment rate? |
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Definition
| Bureau of Labor Statistics |
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Term
| What are the 3 groups of unemployment? |
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Definition
1. employed
2. unemployed
3. not in the labor force |
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Term
| Who is considered employed? |
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Definition
- paid workers
- self employed
- unpaid workers in a family business
(anyone who receives payment for their services) |
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Term
| Who is considered unemployed? |
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Definition
| - people not working who have been looking for work during the previous four weeks |
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Term
| Who is considered not in the labor force? |
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Definition
- under 16 years old
- mentally ill
- those not looking for work |
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Term
| Who is included in the labor force? |
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Definition
- total # of workers
- including employed and unemployed |
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Term
Equation for unemployment rate
- % of the labor force that is unemployed |
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Definition
| u rate = 100 x number of employed/labor force |
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Term
Equation for labor force participation rate
- % of the adult population that is in the labor force |
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Definition
| lfpr = 100 x labor force/adult population |
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Term
| Who is included in the adult population? |
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Definition
| not in labor force, employed, and unemployed |
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Term
| Problems with the unemployment rate (2) |
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Definition
1. discourage workers
2. underemployed workers |
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Term
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Definition
1. Frictional unemployment
2. Structural unemployment
3. Cyclical unemployment |
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Term
| What is frictional unemployment? |
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Definition
| Unemployment caused by delays in matching available jobs and works |
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Term
| 2 Example of frictional unemployment |
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Definition
1. individuals searching for jobs or waiting to take jobs soon
2. individuals who are moving, lag after college |
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Term
| What is structural unemployment? |
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Definition
| - caused by changes in the industrial makeup of the economy |
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Term
| Examples of structural unemployment |
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Definition
| - factory jobs, telephone operators |
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Term
| What is cyclical unemployment? |
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Definition
| - caused by the recession phased of the business cycle |
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Term
| Example of cyclical unemployment |
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Definition
| - an individual whose job is terminated or laid off due to decreased demand for products |
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Term
Workers in a high-end restaurant are laid off when the establishment experiences a decline in demand during a recession.
A. Frictional
B. Structural
C. Cyclical |
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Definition
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Term
A husband follows his wife to a new city for her job. He takes a few months to find a job.
A. Frictional
B. Structural
C. Cyclical |
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Definition
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Term
A group of automobile workers lose their job as a result of a permanent reduction in demand for automobiles
A. Frictional
B. Structural
C. Cyclical |
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Definition
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Term
| Which 2 types of unemployment are consistent with a growing and healthy economy? |
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Definition
| - frictional and structural unemployment |
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Term
| When an economy is healthy, cyclical unemployment should go to _____ |
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Definition
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Term
| What is natural unemployment? |
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Definition
- there will be frictional and structural unemployment
- rate above 0 |
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Term
| Is cyclical unemployment natural? |
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Definition
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Term
| Full employment is believed to occur when the unemployment rate is about ______ |
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Definition
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Term
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Definition
| Actual GDP - Potential GDP |
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Term
| Is the GDP gap a negative or positive number? |
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Definition
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