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Unemployment -
Unemployment -
- Unemployment - failure to use available resources, particularly labor to produce desire goods and services
- Population - the total amount of people in a country
- Labor force - total number of people in a country that is employed or unemployed
- Employed -
- people who are 16 years of age or older who have a job
- work at least 1 hour every 2 weeks
- Unemployed -
- people who are 16 years of age or older that do not have a job but are actively searching for a job within the last 2 weeks
- Not in the Labor Force -
- kids, full-time students, retirees, disabled people, homemakers (mothers, stay at home), mentally institutionalized, incarcerated, military , discouraged workers
- Frictional Unemployment -
- temporarily unemployed or in-between jobs
- workers are qualified and have transferable skills
- high school or college graduates
- people who are looking for better opportunities
- Seasonal Unemployment -
- due to the time of the year and the nature of the job
- life guards, construction workers, mall Santa Clause, Easter bunnies, school bus drivers
- Structural Unemployment -
- changes in the structure of the labor force which makes some skills obsolete
- workers do not have transferable skills
- VCR repairmen, typewriters repairmen
- creative destruction - new jobs are created, old jobs are destroyed
- Cyclical Unemployment -
- unemployment that results in economic downturns with recessions
- as demand for goods and services fall, demand for labor falls and workers will be laid off
- Unemployment Rate -
- (Number of Unemployed / Total Labor Force) * 100
- Total Labor Force: (# of Unemployed) + (# of Employed)
- Full Employment or NRU - Natural Rate of Unemployment (4-5%)
- frictional + structural unemployment = NRU
- no cyclical employment allowed
- Okun's Law - for every 1% in which the actual unemployment rate exceeds the natural rate of unemployment, it causes a 2% decline in real GDP
- (Actual Unemployment Rate - Natural Rate of Unemployment) x 2 = % decline in real GDP
- Rule of 70 - calculates the number of years that is required to double GDP
- 70 / x , x is expressed as a percentage but the answer won't be a percentage
- Ex. the inflation rate is 2%, how long will it take for GDP to double?
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