...Will It Get Any Better Soon? : Unemployment Rates Ariel Cooper Business Economics GM545 Summer 2011 alcoop86@gmail.com Chapter 16, Question 5 In the US economy there is always some level of unemployment present. There are people losing jobs, leaving jobs, taking temporary hiatus from employment, on a daily basis. For the purpose of this exercise will be taking an in depth look at what a specific type of unemployment entails. This unemployment type is called Frictional unemployment. Let’s begin by defining what frictional unemployment is; frictional unemployment refers to the “natural” unemployment of our economy. This is described as the transitional period in which people move from one employment position to another, sometimes experiencing up to a few weeks in between positions. (Stone, Core Economics, p. 443) During this period of time these people are frictionally unemployed, they may already have a new position waiting on them to start, or they may be holding out in search of a better employment opportunity. Frictional unemployment can also refer to when a business decides to promote a hiring freeze and does not bring in new talent due to the assumption that there are not enough qualified candidates, when in fact there are. We will now discuss why frictional unemployment is important to have in any economy. Frictional unemployment is important to have in the economy because there is a constant reallocation of resources from one productivity level to another...
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...Introduction When an economy is in a recession, total spending falls, businesses produce a lower volume of goods, and as a result, unemployment occurs. For example, during the great depression of the 1930’s in America, the unemployment rate rose to a record high twenty-four percent*. Two other notable times of recession yielding unemployment include the oil crisis of the 1970’s and 1980’s, and the great recession of 2008. During these times, the labor force, or people who are able and willing to work, has a higher amount of people without jobs than usual. Unemployment, of which there are many types, is a problem within the business cycle that can cause negative effects on a countries’ economy and businesses alike. Measurement Unemployment is measured each month by the U.S. Bureau of Labor Statistics (BLS). The process of which they conduct this survey consists of questioning a random 60,000 households and ascertaining as to who is employed and who is not**. With a series of questions, the BLS finds which members of the households are working, who is looking for work, who is not looking for work, etc. After receiving this information, the BLS uses the data and forms an unemployment rate for the entire nation. By the BLS’ definition, there are three groups of the U.S. population. The first consists of people under the age of sixteen and those who are institutionalized; these people are not considered members of the labor force. Another group not considered to be...
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...Ime Ekwere Business Economic Business Economics GM545 Fall 2011 Ime_ekwere2004@yahoo.com 16-5 Why is frictional unemployment important to have in any economy? Frictional unemployment is considered as a sign of an economy well being for unemployment that exits in a fast-growing economy with an expanding mobile, flexible and adaptable labor force of having choices. This type of unemployment is beneficial to workers because it allows them to seek for jobs they want the most or jobs those best suits them. It also benefits companies, because it allows them to choose from among the best talent. The absence of frictional unemployment entails people to remain in the same jobs for life, creating a stagnant system that suppresses innovation and rusticates skills. Frictional unemployment is important in the economy because it matches the demand for worker with supply and brings equilibrium into the labor market. Frictional employment arises from those candidates that are just leaving from colleges and those who are unemployed because they are changing jobs. Frictional unemployment is present because there is imperfect information in the labor market and workers have to search for employment suitable for them. 16-11 Structure unemployment: this is a type of unemployment that arises from an absence of demand of workers that are available. Reasons for the absences of demand for workers are due to the change in technology, where machines are use to...
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...Graduate School of Management Business Economics GM545 Online Graduate Course Summer Session A, July 2010 Project Part 2 7 August 2010 Exercise 1: Chapter 15, Question 14 (textbook page 424) National income and output are used in economic studies to estimate the value of goods and services produced in an economy—a snapshot of a country’s economic activity. A system of national accounts is employed to account for and record economic changes. National income is calculated using a variety of different methods. Some of the more popular methods include GDP (Gross Domestic Product), GNP (Gross National Product), NNP (Net National Product), NNI (Net National Income) PI (Personal Income) and PDI (Personal Disposable Income), among many others. [ (Investopedia ULC 2010) ] National income statistics provide us with a numerical comparison of one country’s economic situation with another country’s economic situation. Easily economic growth of countries can be compared over time or at a particular snapshot in time. National income accounts also provide government agencies and private businesses with a tool for economic planning and budgeting. What’s more is this information provides a comparison with the standard of living from one country to another. Many issues arise with accounting for the true national income of any country. Certainly there is a concern for double-counting, for example the outputs of one business are the inputs of another business. If both are accounted for...
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...Business Economics GM545 FALL TERM Chapter 15: Q14 There is a lot to be said about being a part of a national estimation or basic "guesstimation "in my mind. Any time there is a standard that is based on a calculation of how much the average versus the absolute, and then you are always going to have a situation where the guess may not be as all inclusive as needed be. When Richard Stone came up with the system to gauge how much is being spent in each household and funneling back into the market this was a "just-about" ingenious way to make sure we know what is going on in our economic basic structure. Coming up with a way to measure the expenditures of the Americans in comparison to other nations can be very useful when trying to figure out the needs that society may have and what it takes to fill the gaps however, this can take an unforeseen turn of events just as it did in the days of the great depression. The problem with accurate representation from a society that income fluctuates based on shortcomings in the ability to employ the employable is that income is never the same. There are businesses in this country that go unaccounted for and there are businesses that are being accounted for that is no longer in existence and this affects the estimation. If this information is not taken into account the numbers or end result will definitely be an inaccurate one. Just like in the days of the days of the Great Depression the information that was used to devise the...
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...Mawuena Cedric Gbedey BUSINESS ECONOMICS PROJECT II CHAPTER 16, QUESTION 5 Frictional unemployment is defined by Investopedia as “Unemployment that is always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information” and gives another example as a first-time job seeker may lack the resources or efficiency for finding the company that has the job that is available and suitable for him or her. As a result this person does not take other work, temporarily holding out for the better-paying job. Retrieved from http://www.investopedia.com/terms/f/frictionalunemployment.asp#axzz1ZfufVuVW on 10/01/2011. Wisegeek.com also defined functional unemployment as natural phenomena and is viewed as beneficial to both the economy and the worker. They went ahead to explain that any time someone is between jobs, this is considered frictional unemployment. Some common examples include craftspeople who are laid off between projects and people who quit their jobs to relocate or to seek out better employment. Retrieved from http://www.wisegeek.com/what-is-frictional-unemployment.htm on 10/01/2011. Based on the definitions given above, it is quite clear that frictional unemployment is inevitable. So far as no living thing lives forever, there comes a time where an employer goes out of business and or the employee quits. It is considered a natural circle which is actually healthy for...
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...| | Business Economics GM545 Project 2 | | Chapter 16-Question #5 Frictional unemployment Unemployment that is always present, it occurs when employees are transitioning from one place of employment to another or employees searching for new or better positions (Frictional Unemployment, 2013). Frictional unemployment is a natural part of our economy, and is considered to be necessary and beneficial. Frictional unemployment gives people time to search for jobs that they really want. It allows employers to choose the best employees to suit their demand. Without frictional unemployment, employees will be forced to continue to remain in jobs that they do not want, and employers will be forced to continue to employ employees that are not best suited for the jobs that they are in (Stone 2008). Chapter 16-Question #6 Hyperinflation is described as an extremely high rate of inflation, in the past it was thought that hyperinflation occurred when inflation was 50% a month, but now it has been redefined as when inflation is 100% per year. Hyperinflation is caused when government spending exceeds is tax revenues, and government is forced to print more money to finance these debts without concrete backing. During the peak of inflation, workers are paid hourly and they scramble to purchase whatever their earnings will allow them. In the end, money has no value, and other forms of trades such as barter takes over. This causes a distrust in the money and consumers are...
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...Randy M. Little Business Economics GM545 randym.little@gmail.com Why is frictional unemployment important? To discuss why frictional unemployment is important to the economy, one must understand what the terms mean. Frictional unemployment is when people are unemployed because they are seeking better positions. These individuals could be recent college graduates or people who are between jobs/waiting to start a new position (voluntary or involuntary). Stay at home parents returning to work. Friction unemployment should be viewed as a short unemployed term because those people are actively seeking new employment. The reason why frictional unemployment is important is because it allows the economy to be flexible, mobile and the choices of jobs are readily available for people to seek and choose from (Nayab. 2010). When there are options for individuals to seek better employment opportunities, it benefits companies as well. It encourages the individuals to find work that is going to be suited to their needs and skills (Carter, June 2011). That is a great benefit as people begin to hold out for the position they seek and not settling for a job just to have one. If the frictional unemployed start to take a position just for the sake of having a job, they will continue to seek other jobs of their choice and when one is found they would vacate their current position. The companies are able to seek, recruit, hire and retain a more skilled labor force. This truly benefits...
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...Unemployment Economists try to determine the health of economies by monitoring data sets, statistics and indices. Economic data, which are permanently released by the government and statisticians, are a helpful tool to assess the current stage of an economy (e.g., recession, depression). The national unemployment rate, which is released monthly by the Bureau of Labor, is one of the most important economic indicators. This memo will focus on the different types of unemployment, the ways to measure unemployment, the unemployment data itself, and policies that are used to target unemployment. The different forms of unemployment Although unemployment as a concept has a negative connotation, there are three types of unemployment, which differ in terms of their impact on the economy. The first type, frictional unemployment, is the least severe kind of unemployment. According to the website Investopedia.com, frictional unemployment “is always present in the economy, resulting from temporary transitions made by workers and employees or from workers and employers having inconsistent or incomplete information” (“Frictional Unemployment”). Clearly, no tall job seekers have the tools to find the right company. Even people who can access job offers online might not be able to find the right position. However, employers face the same problems. For example, a company might have an open position for a bilingual administrative assistant, but hiring managers may not have the right...
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...Principles of Economics (Econ 1) 1 EMPLOYMENT AND UNEMPLOYMENT (INTRODUCTION) • The Keynesian revolution was driven by the desire to explain the high unemployment (U) of the 1930’s. • The solutions proposed by Keynes, focused on the use of countercyclical fiscal policy (AD demand management) to cure U. • Hence countercyclical fiscal policy was seen as effective in smoothening business cycles. • Cyclical U is associated with GDP being below equilibrium. 2 EMPLOYMENT AND UNEMPLOYMENT (INTRODUCTION) • But it is possible to have equilibrium U even when GDP is at its potential level. • It is therefore necessary to explain both cyclical and equilibrium unemployment. • Under this topic, we will cover the following: – Measurement and definitions, – Theories of U, – Economic costs of U, and – Solutions of U. 3 EMPLOYMENT AND UNEMPLOYMENT (Definitions and Measurement) • The unemployment rate: It is the ratio of the number of unemployed persons to the total number of persons in the labor force. It is usually expressed as a percentage. • The labor force consists of all those persons who are willing to work at a market equilibrium wage, and who either have jobs or are seeking work. 4 EMPLOYMENT AND UNEMPLOYMENT (Definitions and Measurement) • Discouraged workers: These are people who are willing to work at the going wage, but have given up looking actively for work, because they do not expect to find a job. • They are not registered for unemployment compensation...
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...econs Question 1: HCI Prelim 2007 The unemployment rate in Singapore increased from 2.7% in 2001 to 4.2% in 2005. | (a) | Explain the main causes of unemployment in Singapore in recent years. | [10] | Introduction Define unemployment. State that there are mainly 3 causes of unemployment in Singapore. Cyclical unemployment in Singapore State Cyclical unemployment is related to the business cycle. Elaborate During an economic downswing (recession or depression), aggregate demand decreases and firms find they cannot sell all their current output, and stocks pile up. Firms will then adjust to the deficiency of demand by cutting back on production and reduce workers, leading to an increase in cyclical unemployment. Exemplify Over the last 2 decades, recessions or economic slowdown have been largely triggered by external shocks to our economy such as the Asian Financial Crisis in 1997/98; global dotcom crisis in 2000/01; September 11 terrorist attacks in 2001; the SARS epidemic in 2003 and most recently the Global Financial Crisis (US sub-prime mortgage crisis) in 2008/09. The economy went into sharp contractions as a result of these external shocks. These shocks badly affected our export trade with the rest of the world, tourism and international banking as well as financial services sectors. In short, it hit our export revenue (X) and investment (I) components of AD causing domestic output to fall. And since exports from Singapore are dominated...
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...GM 545: Business Economics Chapter 16, Question 5 Unemployment rates in the U.S. are classified under two types, the frictional and structural unemployment. Frictional unemployment depends on the level of demand while structural unemployment depends on the relationship between labor skills and industrial changes that are mostly related to technology (Gilpatrick 1966). Frictional unemployment will always be present in any economy, even a high performing one, and is also vital and beneficial to every economy. A recent study suggested that the industrial structure of cities plays an important role in determining the national rate of unemployment. The more industrially diversified the city is, the lower the rate of unemployment and the more evenly distributed employment is across industries (Simon 1988). Frictional unemployment occurs naturally and appears when an individual is between jobs. This is typically a temporary transition from one position to the next. These individuals may be classified as first time job seekers, recent college graduates, or career advancers looking to hold out for corporate climb. These individuals are frictionally unemployed because they are not taking other career opportunities and are holding out for a better position. When a person quits their job to relocate, they are also considered frictionally unemployed. Another example of frictional unemployment is when a company decides not to hire due to lack qualified applicants that would be able to...
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...Study Guide Concepts Mastery Score: 10 / 10 Questions Stages in the Business 100% 1 Level of Economic Growth 100% 4 Level of Unemployment 100% Inflation 100% Cycle 2 3 5 6 7 9 10 8 Concept: Stages in the Business Cycle Mastery 100% 1. Business cycles occur when output Questions 1 2 3 A. falls below its potential B. rises above its potential C. is fixed at its potential D. fluctuates around its growth trend Correct: The Correct Answer is: D. The business cycle includes the tendency for output to rise and fall in the short term. When output fluctuates around an economy’s secular trend, business cycles occur. 2. Which of these statements best describes a complete individual business cycle? A. Movement from peak to trough to peak B. Movement from recession to expansion C. Movement from peak to recession to trough D. Movement from trough to expansion then to peak Correct: The Correct Answer is: A. A business cycle is measured peak to peak or trough to trough. 3. During the business cycle, the period between the point at which output reaches a high and the point at which it reaches a low is called A. a peak B. a trough C. an expansion D. a recession Correct: The Correct Answer is: D. A downturn describes the phenomenon of economic activity starting to fall from a peak. If output contracts between the point...
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...Ahmed Shaqo Business Economics GM545 Spring session A 2012 Adam.gmail.com Chapter-25 question 14 Why might protections trade barriers not save American jobs or benefit the economic? First of all I would like to defined what protection trade barriers means, it’s a measure that government or public authorities introduce to make imported goods or service less competitive than locally produce goods or service. The government has much way to apply trade barriers such as Tariffs, quotas, embargoes, license required, and regulations establishing health and safety. Protection trade barriers does not save American jobs or benefit the economic for a several reasons: 1- It would cause a limited choice of product and would therefore force customer to pay higher prices and accept inferior quality, for example Tariffs are taxes will increase the imported products’ price which has the same quality as goods produce by local suppliers that will cause the customer to pay more for product he could have it for cheap price. 2- Quotas is a legal limit on amount that can be imported, which may cause raise price on the foreign product, , for example if we import ten million technology product from china every year that mean we need this amount because is cheaper and has good quality’s. Government put a limitation for import technology product from china to five a million part a year, that will make this particular product cost more money, because the foreign country knows that...
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...Business Economics GM545 Fall 2013 Chapter 15, Question 14 There are always limitations in anything that we do just as there are also limits of the national income accounts and how it reflects our standard of living. National income is measured in three ways, which include the value of expenditures, the value of inputs used in production, and the sum of value added at each level of production (Ott). The most widely used measurement of national income is gross domestic product (GDP). GDP is a measure of the economy’s total output and is equal to the total market value of all final goods and services produced by resources in the United States (Stone 411). The limitations of the national income when measuring our standard of living include errors in measurement (GDP) and categories that are not measured. GDP only measures the absolute value of goods and services. For this reason, there is a limitation because the values of goods used to produce a product are not measured. This prevents “double counting”, since the value of the products used to produce a product are already calculated. GDP is a measure of the amount only produced by resources in the United States (Stone 412). So if a product is made outside of the U.S. by an American manufacturer it is not calculated into GDP. NIPA (National Income and Products Account) uses the prices paid for products to calculate GDP. So even if a company loses profits when selling a product that is what factors into GDP, not the production...
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