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Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts

9/24/11

Different types of unemployment, and how they are measured

15:00
Different types of unemployment, and how they are measured

The unemployment rate has become a highly talked about issue in the news recently, but it is important to understand some of the attributes of the unemployment rate so that you are not deceived by reports.  The first is that the unemployment rate can go down, which makes it seem like the economy is recovering when in fact workers are suffering from the discouraged-worker effect.  This happens when people STOP looking for jobs, and leave the labor force.  Because they are not actively looking for a job, they are no longer considered unemployed and the unemployment rate drops.

The different types of unemployment are:

8/20/11

A vertical Phillip's curve shows that their is no trade off between inflation and unemployment

15:16
A vertical Phillip's curve shows that their is no trade off between inflation and unemployment

A question was recently asked: If the Phillips curve is _____ in the long run, there is no trade-off between inflation and unemployment in the long run.  In order to answer this question we will have to understand two things, how to graph relationships between two variables, and what the Phillip's curve looks like.  The Phillip's curve attempts to show the theoretical relationship between the inflation rate, and the unemployment rate in an economy.  The two have a significant relationship if we change one of the variables, say inflation, and we see that this causes a change in unemployment.  Lets test this idea on the graph to the left to see if we can come up with any sort of relationship given those two curves.