Diemmi Nguyen
Econ102
January 9, 2017
Dr. Nurul Samiul Aman
Midterm Exam
Question 1
Full employment is when there are enough jobs available so that everyone can work. Full employment does not necessarily mean that the unemployment rate is 0. At full unemployment, there is frictional and structural unemployment. Frictional unemployment is the process of people moving from one occupation to another. Structural unemployment is when the individual do not qualify for the jobs. The definition of ‘full’ employment does not have a clear measured rate due to bad data on job industries. First off, surveys can provide inaccurate data. Secondly, when the demand is high, employers will take chances for people who normally would not qualify for the
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This relationship will cause an increase in the costs per unit of output of products and goods, causing inflation for the economy.
Question 2B
Question 3A
Date of purchase: $500,000 of shares of stock CPI = 190
One year later: $530,000 price sold CPI = 200
Rate of return = (530,000-500,000)/500,000 = 0.06 = 6%
% of inflation = (200-190)/190 = 0.0526 = 5.263 % inflation
“real” rate of return = we paid ($500,000/190) X 100 = $263,158 of shares of stock we received ($530,000/200) X 100 = $265,000 from the sale. So real rate of return = (265,000-263,158)/263,158 = 0.7 %
Question 3B
The CPI includes some weight of imported goods, while the GDPD does not include the weights of imported goods. In this situation, we are calculating the real rate of return, so we use the CPI because it more accurately expresses the average percentage of price increase of household purchases with income, as well as goods and services.
Question 4A
The rise increase of inflation expectations lowers the expected real value of future payments to T-note buyers. This makes the current prices less attractive and reducing demand. As a result, the prices of the T-notes will lower, as nominal interest yields increase from 2.8% to 4.2%.
Nominal interest before = 0.6%+2.2% = 2.8%
Nominal interest after one year = .2%+4% = 4.2%
Question 4B
Quesetion 5
Labor Productivity = Y/L Y = RGDP and L= hours of labor worked in economy per
In any economy, no matter whether it is controlled by the government or by free markets, people need to work in order to support it. The government does not generate tax revenue by magic. There have to be people in that economy earning an income to ensure that the government continues to collect taxes. In a free market economy, the same applies because there are some services which only an organized government can supply (such as protection from extra-national threats), but there also those which the people get for themselves because of the working of the markets. In any scenario, unemployment is, at the very least, a drag on the economy, and it can be much worse. This paper examines how the unemployment rate in the United States is underreported, and how that fact effects the sluggishness of the present economy.
Full employment is the point in an economy, where everyone who is willing and able to work is in a job. A labour market policy the government could implement to help reach full employment could be the rise in the compulsory age for people in training or education. The effect of this will be that people will have better skills when
Before one can understand the various components of unemployment it should first be understood what exactly unemployment is. Unemployment is defined as people who are currently not employed, available for work and tried to find a job within the last 4 weeks. (Makiw 299). This means that not all people without a job are necessarily considered unemployed. Workers without a job who are no longer searching for a job fall into the category of discouraged workers. This group of individuals is not included in the figure for finding the unemployment of a
Unemployment rates were essentially higher in August in 6 states, lower in 3 states, and stable in 41 states and the District of Columbia, the U.S. Authority of Labor Statistics reported today. Ten states had eminent jobless rate diminishes from a year prior, 5 states had increments, and 35 states and the District had no noteworthy change. The national unemployment rate stayed at 4.9 percent in August and was minimal not quite the same as that of August 2015.
The national unemployment rate in the United States from December 2015 is 5.0 percent, which has reduced from the previous months in 2015. The unemployment rates for Whites are 4.5 percent, which is lower than the national average. But sadly the unemployment rates for minorities are much higher. According to bls.gov the rate for unemployment for African Americans is 8.3 percent; although this number is the lowest it has been since 2007, theirs is still higher than the national average. The unemployment rate for Mexican-Americans (Hispanics) is 6.3 percent and for Asian Americans is 4.0 percent. This shows that overall African-Americans still have higher unemployment than every other demographic since December 2016.
The U.S. economy has many elements of markets that had seen either an increase or decrease from activity or production. Beside these other markets (such as gasoline, or airplane seats) there has been a steady growth of the Real – Estate market. Due to these slight increases in the housing market, there can now be other positive effect throughout the U.S. Firstly, with the steady increase within the housing market, there’s a better chance of an economic growth. Secondly, the unemployment rate will steadily continue to decline from housing sales. Thirdly, there will be more work opportunities offered.
Higher interest rates make stocks less attractive compared to bonds. However, bonds released previously to the rate hike will become less attractive than newly issued bonds, unless, of course, they carry a floating interest rate. Net result will be bond prices declining.
An increase in aggregate demand leads to an increase in the demand for labour shown as a shift from DL to DL1 which leads to increase in employment as a result of the wage rate increasing from 1 to 2. However, due to the natural rate of unemployment the supply of labour shown as SL, shifts to the right to SL1 where the wage rate is represented as 3 and employment returns to the natural rate.
the economy to full employment in the long run. When the output is more than the full employment
Employment is the overall total number of people with a job, which in includes the employees, businessmen, and self-e employed/ entrepreneurs. The total number of employed can change over time due to several factors. According to Wise geek (2015) “The relationship between Gross Domestic Product (GDP) and unemployment rates can be seen by the application of Okun’s Law” Additional, “According to the principle established by this law, there is a corresponding two percent increase, in employment for every established one percent increase in GDP” (Wisegeek, 2015) Unemployment rate is the number of people who are willing to work, able to work and those who are looking for work that are unable to find work. The unemployment rate is one of the most scrutinized and monitored statistics. This is a result that most economist believe that when this increases it is clear sign that the
Unemployment is a simple term in itself but the concept is not as clear-cut as it may suggest. Unemployment is a key macroeconomic indicator used by policymakers to determine the economy’s performance relative to it’s productive potential (OECD, 2014). However, for it to be a reliable indicator there must be a commonly accepted definition to allow for comparison. The United Kingdom follows the internationally agreed definition of unemployment set by the International Labour Office (hereinafter: ILO) as “Anybody who is without work, available for work and seeking work. This includes those who have actively sought work in the last 4 weeks, available to start work in the next 2 weeks, or is waiting to start work in the next 2 weeks” (Geneva 1982, Cited by International Labour Office). The Labour Force Survey (hereinafter: LFS) is a sample survey covering a three-month period that is consistent with the ILO definition, this allows for cross-country comparisons. It is a direct assessment of unemployment is used to establish those that are employed, unemployed or economically inactive. Another means of unemployment measurement is the Claimant Count, it’s a by-product of administrational data collected by records of those on job seekers allowance. For the sake of this essay I will not be focusing on the Claimant count due to it underestimating unemployment figures- as seen in below in Figure 1.
Unemployment and the rate of Inflation are two main problems faced by most economies around the world. Lower rates of each are sought after in order to create and maintain a more stable economy. Unemployment rate can be officially defined as a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. The inflation rate is the percentage rate of change of a price index over time. The Retail Prices Index is also a measure of inflation that is commonly used in the United Kingdom. It is broader than the CPI and contains a larger basket of goods and services.
That increases demand, which then creates demand-pull inflation. Once expectation of inflation sets in, it's hard to eradicate.
Over the past ten years there has been a great shift in society’s employment system. Corporate America has taken major cutbacks in the working labor department that has left many citizens unemployed and destitute. Anger and concern over layoffs, wage unproductivity, declining benefits, and the movement of jobs overseas has left citizens with harsh and undesirable views of the actions and motivations of Corporate America. With the unemployment rate on a downward slope, American citizens have become distressed which has resulted in emotional, social, and, economic hardships. Even though the unemployment rate in the
Money is essential to any individual looking to have a decent lifestyle; labor is the avenue through which this is acquired. The economy goes through various fluctuations in activity causing unemployment to fall, rise, or level out. What this creates is the first type of unemployment, known as cyclical; frictional is the second type, caused by a temporary leave (for whatever reason) by the employee, and structural is the third type, varying with the economic changes in demand. The absence of unemployment at its maximum level is termed full employment, another version of unemployment. The term encompassing the sum of the frictional, structural, and, yet another type of unemployment, surplus unemployment is that of the natural rate of