CHAPTER9Unemploymentand InflationChapterOutlineandLearningObjectives9.1Measuring the UnemploymentRate,theLaborForceParticipation Rate,andtheEmployment-PopulationRatio9.2Types ofUnemployment9.3Explaining Unemployment9.4Measuring Inflation9.5UsingPrice IndexestoAdjustfortheEffectsofInflation9.6Nominal Interest Rates versusReal InterestRates9.7DoesInflationImposeCostsontheEconomy?
1 Chapter Outline and Learning Objectives 9.1 Measuring the Unemployment Rate, the Labor Force Participation Rate, and the Employment -Population Ratio 9.2 Types of Unemployment 9.3 Explaining Unemployment 9.4 Measuring Inflation 9.5 Using Price Indexes to Adjust for the Effects of Inflation 9.6 Nominal Interest Rates versus Real Interest Rates 9.7 Does Inflation Impose Costs on the Economy? CHAPTER 9 CHAPTER Unemployment and Inflation
MeasuringUnemploymentand InflationLast chapter, we learned about how to measure total output-acritical first step in understanding the economy.In this chapter, we continue along these lines, learning about how tomeasure unemployment and inflation.These are very important and commonly-used macroeconomicconcepts; we want to solidify what they mean, so that we can talkintelligentlyaboutthem@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 2 Measuring Unemployment and Inflation Last chapter, we learned about how to measure total output—a critical first step in understanding the economy. In this chapter, we continue along these lines, learning about how to measure unemployment and inflation. These are very important and commonly-used macroeconomic concepts; we want to solidify what they mean, so that we can talk intelligently about them
MeasuringtheUnemploymentRate,theLaborForceParticipationRate,andtheEmployment-PopulationRatio9.1LEARNINGOBJECTIVEDefine the unemploymentrate,thelaborforceparticipationrate,and theemployment-populationratioandunderstandhowtheyarecomputed@2015PearsonEducafion,lnc
LEARNING OBJECTIVE © 2015 Pearson Education, Inc. 3 Measuring the Unemployment Rate, the Labor Force Participation Rate, and the Employment–Population Ratio 9.1 Define the unemployment rate, the labor force participation rate, and the employment–population ratio and understand how they are computed
MeasuringUnemploymentThere are more than 300 million people in the United States, andmonitoring and reporting on their activities regularly would be verydifficult and costly.Instead, the U.S. Department of Labor reports estimates ofemployment, unemployment, and other statistics related to the laborforce each month.Labor force: The sum of employed and unemployed workers in theeconomy.Of these statistics, the most watched is known as the unemploymentrate:thepercentageofthelaborforcethatisunemployed.@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 4 Measuring Unemployment There are more than 300 million people in the United States, and monitoring and reporting on their activities regularly would be very difficult and costly. Instead, the U.S. Department of Labor reports estimates of employment, unemployment, and other statistics related to the labor force each month. Labor force: The sum of employed and unemployed workers in the economy. Of these statistics, the most watched is known as the unemployment rate: the percentage of the labor force that is unemployed
The Household SurveyEach month, the U.S.Bureau of the Census conducts the CurrentPopulation Survey (a.k.a. the household survey)..~60,000 households selected to be“representative": Household members of “working age" (16+ years old). Asked about employment during“reference week": Also asked about recent job-search activitiesPeople arethenclassifiedas:. Employed: Worked 1+ hours in reference week (or weretemporarily away from their jobs).Unemployed: Someone who is not currently at work but who isavailablefor work and who has actively looked for work during theprevious monthNot in the labor force, if neither of the above apply2015PearsonEducation,lnc
© 2015 Pearson Education, Inc. 5 The Household Survey Each month, the U.S. Bureau of the Census conducts the Current Population Survey (a.k.a. the household survey). • ~60,000 households selected to be “representative” • Household members of “working age” (16+ years old) • Asked about employment during “reference week” • Also asked about recent job-search activities People are then classified as: • Employed: Worked 1+ hours in reference week (or were temporarily away from their jobs). • Unemployed: Someone who is not currently at work but who is available for work and who has actively looked for work during the previous month • Not in the labor force, if neither of the above apply