A Brief Note On Unemployment And The Unemployment Rate

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†¦show more content†¦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 â€Å"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 perShow MoreRelatedA Brief Note On Unemployment And Unemployment Rate846 Words   |  4 PagesThere are three major types of unemployment, including frictional unemployment, structural unemployment and cyclical unemployment. Frictional unemployment is the short-term unemployment arising from matching workers with jobs. Structural unemployment is because of more people are seeking for jobs in a particular labor market than there are jobs available at the current wage rate. Cyclical unemployment is due to the business cycle. When an economy goes into a recession, demand for most goods and servicesRead MoreA Brief Note On U.s. 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