Types of Unemployment
This refers to people of working age who are actively looking for a job but who are not employed
What is unemployment?
A sustained increase in the general price level
What is inflation?
Involves an excess of aggregate demand over aggregate supply at the full level employment level of output, and is caused by an increase in aggregate demand. It is shown in the AD-AS model as a rightward shift in the AD curve.
What is Demand Pull Inflation
A point where unemployment is less than its natural rate
What is an inflationary gap?
A cost of inflation (choose one)
What is … redistribution effects, increasing wages, lower purchasing power, increasing interest rates, uncertainty?
This occurs when the demand for labor in certain industries changes on a seasonal basis because of variations in needs.
What is seasonal unemployment?
A sustained decrease in the general price index
What is deflation?
Caused by a fall in aggregate supply, in turn resulting from increases in wages or prices of other inputs, shown in the AD-AS model as a leftward shift of the AS curve.
What is Cost Push Inflation
The number of people who are either working or unemployed, but looking for a job
What is the labour force?
A cost of deflation (choose one)
What is … redistribution effects, increase in debt value, uncertainty, deferred consumption, increasing cyclical unemployment, risk of a deflationary spiral, bankruptcies, inefficient resource allocation, policy ineffectiveness?
This occurs when workers are between jobs. Workers may leave their job because they have been fired, or because they are in search of a better job, or they may be waiting to start a new job.
What is frictional unemployment?
This refers to a fall in the rate of inflation; it involves a positive rate of inflation and should be contrasted with deflation
What is disinflation?
Consumers postpone spending, usually when they expect that prices will fall
What is Deferred Consumption
When unemployment is below 5%
What is full employment?
Cash holders, investors, fixed incomes, savers and lenders benefit
What are deflationary redistribution effects?
This occurs as a result of changes in demand for particular types of labor skills, changes in the geographical location of industries and therefore jobs, and labor market rigidities.
What is structural unemployment?
A measure of the cost of living for the typical household, and compares the value of a basket of goods and services in one year with the value of the same basket in a base year.
What is the consumer price index (CPI)?
A curve concerned with the relationship between unemployment and inflation
What is The Phillips curve
Factors that prevent supply and demand from operating in the labour market
What are Labour market rigidities?
A benefit of deflation
What are Increasing exports?
This occurs during the downturns of the business cycle, when the economy is in a deflationary/recessionary gap.
What is cyclical unemployment?
A measure of average prices in one period relative to average prices in a reference period called a base period.
What is a weighted price index?
A kind of phillips curve that occurs over a small period of time
What is the short run Phillips curve
A point when tax revenues are lower than government spending
What is a Government budget deficit?
The appropriate rate of inflation
What is 2-3% per year