Macroeconomics Reading Notes

AP Economics

Mr. Kelly

Chapter 28: Unemployment (Chapter 14 Online Textbook)

1. Why is it vital that countries keep workers fully employed as possible?

To keep their citizens fully employed and keep the circulation of money throughout all households to rely less on the government

2. What is the natural rate of unemployment?

The remaining level of unemployment that occurs even when the economy is healthy.

3. What is the relationship between the natural rate of unemployment and cyclical unemployment?

Cyclical unemployment is the variation caused by the economy moving from expansion to recession or from recession to expansion. Often cyclical unemployment can cause a rise in the natural rate of unemployment.

4. Describe each of the following components of the unemployment rate:

a. Employed- Those who have jobs and are not included in the unemployment rate.

b. Unemployed- Those in the labor force and do not have jobs, they are included in the rate.

c. Not in the Labor Force-They are not included in the unemployment rate.

5. What is the formula for the Labor Force?

Labor force= Number of Employed/ Number of Unemployed

6. What is the formula for the unemployment rate?

Unemployment rate = Unemployed people Total labor force × 100

7. What is the formula for the Labor Force participation rate?

LFPR= Labor Force/ Total eligible population-both the economically inactive and active populations.

8. How is the labor force changing?

The labor force is beginning to include high school and college graduates over time. Women are also beginning to become more involved in the labor force.

9. Who are discouraged workers? How do they complicate the unemployment rate?

Discouraged workers are those who stopped looking for employment and, hence, are no longer counted in the unemployment also fall into this group

10. How does long term unemployment effect the population?

There is a less amount of...