...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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...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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...What are some of the limitations of the national income accounts in how they represent our standard of living? When we look at the national income accounts to compare our income to those in other nations and track the economy’s condition during the business cycle. However, when we look at the income nationally we are not taking into consideration the cost of living in a particular region and how the standard of living differs from country to country. For example, if we compare the US national income with that of Brazil, it will be higher but we would be comparing two different standard of livings, in addition the US is a bigger country than Brazil, and the costs of living in Brazil is lower than the Unites States. In addition, the population and size of the countries do not compare. We can argue that we have a higher quality of standard of living in the Unites States than in Brazil as our national income is higher, but the figure is not telling us how schools, hospitals, infrastructure, benefits compare in the two countries. In addition we are not taking into consideration the amount of national income used for national defense. We also are not looking into the change in population which can be misleading, for example, if the GDP increases but population increases then everyone is getting a smaller percentage of the national income. If we do not look the growth of the population, we could think that the country is doing better by the national income increasing alone. ...
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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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...Chapter 15, Question #14 Three main limitation to national income accounting that I would like to discuss are; errors in measurement, subcategories that are misrepresented, and how welfare is not measured (EconPort). The gross domestic product, also known as GDP, is the market value of all final goods and services produced within a country in a given period. Errors in measurement come into play because we are unable to accurately figure out the United States gross domestic product numbers due to the Black Market. Also known as the underground economy but commonly referred to as the Black Market, effects a major part of the United Sates GDP but cannot be accurately accounted for nobody knows the overall numbers that the Black Market brings in. Therefore the so called overall GDP for the United States is only half of the real GDP of the nation. Subcategories are interpreted when it comes to the national income accounting. Government spending plays a huge factor but are sometimes not included all the time. Decisions are always made about what is to be included where, but minor discrepancies will always arise. The gross domestic product seems to only measure the market activity and not welfare as well. Situations such as unemployment could come into effect which could lower the nation's spending and eventually lower the GDP which will look like it is based on market value and not on welfare value. Chapter 16 Question #5 Frictional unemployment is important to have in our economy...
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...United States of Unemployment There is an epidemic spreading throughout the United States that most people hear about but don’t quite understand the effects it has as a macroeconomic phenomenon—unemployment. According to the latest figures from the Bureau of Labor and Statistics (BLS) the unemployment rate is currently 9.1 percent. From 1948 to 2010 the average unemployment was a little over 5 percent, with an all time high of 10.8 percent. We are currently only a little under 2 percent from the highest unemployment in over a half century. The unemployment rate at 9.1 percent probably seems low to the average American, but it’s not. To put that into perspective, it’s around 14 million people. If the unemployed were a country, the 14 million Americans would be the 68th largest country in the world, bigger than the population of Greece or Portugal (each of which has 10.8 million people) and more than twice the population of Norway (4.7 million). It’s important we find out the different types of unemployment, the causes of unemployment, and the effect is has on the economy. To learn more about the causes and effects of unemployment we must first determine the different types of unemployment. There are three different major types of unemployment; frictional, structural and cyclical. In the case of frictional unemployment, people are only temporarily unemployed due to a transition. Structural unemployment occurs when there aren't enough jobs to support the people who are...
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...labor market stays in equilibrium, with no demand deficient or real-wage unemployment, there are numbers of unemployed people. That phenomenon is called a natural unemployment. By using structural unemployment as our economic concept, we are going to see how a change in the structure of economy could cause a natural unemployment. Recently, Turkey’s unemployment rate rose from 10.9 percent in December of 2014 to 11.3 percent in January of 2015. Slow pace of gross domestic production expansion had caused expansion in the workforce. As a result 300,000 people that worked in agriculture and construction sectors lost their jobs. Unemployment is a situation in economy when people who are willing and able to work can’t get a job....
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...Unemployment in Nevada Abstract Unemployment, one of the two evils of macroeconomics, is defined as the number of people who are actively looking for work but are not currently employed. The rate of unemployment is quite often used as a measure of the health of our economy. To help calculate unemployment rates, data is collected by the U.S. Census Bureau in the form of a survey called the Current Population Survey. The Bureau of Labor Statistics is responsible for analyzing and publishing that data. In reviewing the data specific to the state of Nevada, we have found Nevada’s unemployment is being affected by both national and state government. Many factors including unskilled workers, a housing glut, and Nevada’s unique industries contributed to its record low state of unemployment. Nevada’s recovery will depend on the improvement on the overall economy in order for people to justify higher discretionary spending in a state that relies so heavily on tourism. Unemployment Overview The simple definition of unemployment is the number of people who are actively looking for work but are not currently employed. Unemployment is more complex than its definition reveals, however. Several factors are considered to determine whether one is counted as unemployed. There are three types of unemployment: • Structural — this type of unemployment occurs when there are more people looking for jobs than are available at the current wage rate. People may be unemployed because...
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...there is a homeless people on the ramp holding a sign in his hand stating that they need food or money. In today’s economy, unemployment is at an all-time high. Many Americans face issues that impact their way of life, causes stress, and creates financial strain which makes it hard to provide for their family. No one can deny that unemployment has caused an impact of their lives’ or families. There are many American’s who are unemployed due to the three types of unemployment. The three types of unemployment are Structural, Frictional, and Seasonal. Structural unemployment comes from being an absence of demand for the workers that are available. Many people lose their job because the update on technology. Some people are so uses to be “old fashion” when it comes to work they would rather use the old typewriter as well as computers because they just can keep up with the new technology. People that have lost their jobs due to changes in the economic they can take small steps in to learn how new thing works and later see how well they can grasp to the new technology. Next, is Frictional which is unemployment that is caused by people who moves between job, careers and location? These people are the ones that are more likely to make it the unemployment world because they are the ones’ who can adapt to change. The final type of unemployment is Cyclical which is someone is laid off from their job because of growth rate which can cause a recession. One way that they...
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...“Course Project- Part 2” Business Economics GM 545 Dunya Alaasemi Dalaasemi@yahoo.com Chapter 15, Question 14 According to Ott (2008), “National income is the total market value of production in a country’s economy during a year. It can be measured alternatively and equivalently in three ways: The value of expenditures, the value of inputs used in production and the sum of value added at each level of production” It is a system employed to account for and document economic changes. A national income account system is employed to account for and record economic changes. Investopedia (2012) stated that it provides economists and statisticians with detailed information that can be used to track the health of an economy and to forecast future growth and development. Although national income accounting is not an exact science, it provides useful insight into how well an economy is functioning, and where monies are being generated and spent. The following are some of the metrics calculated by using national income accounting include gross domestic product (GDP), gross national product (GNP) and gross national income (GNI). Ott (2008) found that using these “Statistics as an indicator of standard of living can be erroneous as the result of multiple inaccuracies or conclusions drawing from the data”. Therefore, as indicated in Econport (2006) handbook the following are the limitations of the national income accounts: * Errors in Measurement: Black Market and underground...
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...Frictional unemployment, also known as search unemployment or voluntary unemployment, involves people in the midst of transiting between jobs, arising due to normal labor market mobility and expansion. Frictional unemployment is the short-term unemployment of people who are changing jobs, careers, or locations. This category of unemployment includes the jobless who have the skills and competencies to land a job, and are in the process of finding a job, but have not landed a job yet. Workers who look out for a new job when still retaining their old jobs do not count under frictional unemployment. This type of unemployment exists because of the mismatch between the characteristics of supply and demand in the job market. Frictional unemployment arises due to many reasons, such as: • Expansion of the workforce when young people get out of school or collage equipped with the necessary skills to land a job. • People quitting their jobs and relocating to new places. • People quitting their jobs owing to disagreements, lack of compatibility, or any other reason. • People losing their jobs because the company goes bankrupt, or owing to layoff or termination for any reason. Frictional unemployment never reaches zero because there always remain some companies with some unfulfilled vacancies and some candidates looking for jobs. Improved labor market efficiency and seasonal factors, however, reduce frictional unemployment. The level of frictional unemployment depends...
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...oject 2Project 2 Project 2 Christopher Salazar 3518 N. Howard Ave. Fresno CA, 93726 Chrissalazar07@gmail.com (559)288-8175 GM545 Business Economics 2/5/2012 Jonathan Altman DeVry University Chapter 15 Question 14 In order to know the limitations of Americas National income accounts and how they represent our standard of living, it is necessary to kn0ow our GNP or Gross National Product. According to Chron.com, a business expert web site, it is the total output of and economy, our economy in this case. It is said that the production output of America is directly related to how well we are living, our economy is doing, and also how well we are prepared for any sudden disruptions in the course our economy would take. With the GNP defined, one of the limitations that represents Americas standard of living would be services that are not considered in the GNP. These can still have an effect though but are not considered for various reasons including the government not gaining taxes from it or illegal activity. Any of these are understandable to not consider due to the fact that they are not something America can rely on as solid figures compared to an employer’s payout wages. This however is not something to totally ignore. These services are called Ommition or Underestimation (Chris Chan). The drug trade is a large black market, although there are no solid figures that economists have been able to gain due to the nature of product, it is widely known that much activity...
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...of automation on employment, we must first study the economics of unemployment. Primarily, there are three types of unemployment. First, frictional unemployment, which refers to the unemployment that occurs when workers, who have either left or lost their jobs, search for a new job. Second, cyclical unemployment, which describes the unemployment associated with business cycles occurring in the economy and this unemployment occurs during recessions and depressions. Finally, structural unemployment is the permanent type of unemployment that occurs in long-term when the quantity of labor supplied exceeds the quantity of labor demanded in the economy. In the following section, we will discuss the relationship between automation and unemployment. Primarily, we will emphasize on two issues- 1) Automation does not result in permanent unemployment, and 2) Automation actually creates more jobs in the economy Unemployment created by automation, or technological unemployment, is a type of frictional or temporary unemployment as unemployed workers eventually find new jobs. However, some people believed that technological unemployment might lead to structural unemployment. For several decades, indeed for centuries, the main controversy about technological unemployment has been whether it can ever lead to structural unemployment. The notion that unemployment created by automation may lead to structural unemployment is known as Luddite fallacy. The Luddite premise was originated...
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...The Unemployment in the Arab World The Arab World is composed of 22 Arab-speaking nations. There are three different types of unemployment; frictional, structural and cyclical. The Arab World is mainly facing a frictional unemployment which is caused by the time it takes to match workers with jobs. In fact, over the past 50 years, MENA countries which stands for Middle East and North Africa are experiencing declines in mortality rates and an increase in fertility rates which results in an increasing population growth rates, itself leading to high labor force growth rates so people assume that unemployment will rise. This is what we call the “lump of labor fallacy” because we are assuming that there is a fixed amount of jobs to be done. Moreover, several reasons and factors explain the unemployment in the Arab World, and one that is mainly highlighted is the skill mismatch (Ahmed 1,2). In this paper we will be asking ourselves; Are the skill mismatches the main reason for the unemployment observed in the Arab world? In order to answer this question we will discuss the causes behind skill mismatches as well as its consequences. In the Arab World youth more than adults are not being able to enter the labor market because of the skill mismatches observed between labor market and their education. These labor market mismatches are caused by the failure of the economy to create skilled work as well as by the inappropriate content of education. Title: Youth and adult...
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...classify economic activities into these there sectors for smooth economic administration and development. Q: 7 For each of the following sectors that we came across in this chapter why should one focus on employment and GDP? Could there be other issues which should be examined? Discuss. Answer For each of the sectors mentioned in this chapter our focus should definitely be on employment and GDP. This is because growth in GDP and full employment are common goals of Five Year Plans and they also determine the size of a country’s economy. A focus on employment and GDP helps us to calculate and monitor the most important factors like: per capita income, productivity, changes in employment rate and contribution to GDP by the three sectors of economy and thus, takes necessary steps required for the upliftment of the country’s economy as a whole. Yes, the other issues which should be examined are - 1. balanced regional development 2. equality in income and wealth among the people of the country. 3. how to eradicate poverty 4. modernization of technology 5....
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