Transcript Macro Chapter 7 - Mayfield City Schools

Macro Chapter 7
Presentation 2
Labor Force
• The labor force consists of people
who are willing and able to work
• Both those employed and those
unemployed but seeking work
are counted
Unemployment Rate
• Random monthly survey of 60,000 people
conducted by the Bureau of Labor Statistics
(BLS)
• Use the results of the survey to determine the
unemployment rate for the nation
Unemployment Rate Calculated
• Unemployed = percentage of the
labor force unemployed
• Unemployment rate =
unemployed/labor force x 100
Unemployment Rate Contd.
• The BLS splits the population into 3 groups:
• 1. People under the age of 16 and people
who are institutionalized (prison, psych
hospitals)--- not counted in the labor force
• 2. Not in the labor force- adults who are
potential workers that are not seeking work
(ex. Homemakers, full-time students, retirees)
• 3. Labor Force- counted
Issues / Flaws with Unemployment
• Discouraged Workers not included
– Gave up looking, but would still like to work
• Underemployed
– Working part time or working in a job with a
lower skill level than they possess
• Part-Time Workers- counted as employed
***some by choice some due to lack of
demand
Types of Unemployment
• 1. Frictional Unemployment
–Unemployment which occurs
from people moving between
jobs, careers, or locations
2. Structural Unemployment
–Mismatch of workers and job
openings
–Unemployed people lack the
skills or education, or
geographically are misplaced
Ex- jobs moving from the Rust
Belt to the Sunbelt
3. Cyclical Unemployment
–Occurs from changes in the
Business Cycles (recession,
depression)
–Lay-offs due to a decrease in
demand for goods/services
4. Seasonal Unemployment
• Change in hiring patterns due to the time of
year
• Ex- Ski Instructors, Lifeguards, Landscapers
Full Employment
• Exists when there is structural,
frictional, and seasonal
unemployment but no cyclical
unemployment
Full Employment Rate (Natural
Rate of Unemployment)
• The economy is producing at its
potential output
• The number of job seekers matches
the number of jobs available
• Appx. 4-5%
Nominal Income
• Number of dollars received as
wages, rent, interest or profits
Real Income
• A measure of the amount of goods and
services nominal income can buy
• The purchasing power of nominal income
• Income adjusted for inflation
• Real Income = nominal income/price index (in
hundredths)
Real Income Contd.
• % change in real income = % change in
nominal income - % change in price level
• Ex- price level rises by 6%. If Bill’s
nominal income goes up by 6%, real
income is unchanged. If nominal income
goes up by 10%, real income will go up
by 4% etc.