Chat with AIExam 9: A: Business Cycles, Unemployment, and Inflation
Explain the differences among the frictional, structural, cyclical, and seasonal forms of unemployment.
(72) 
VerifiedFrictional unemployment is the unavoidable and even positive type of unemployment characterized by people who are searching for new jobs or their first job or waiting to take jobs in the near future.Structural unemployment is unemployment due to changes occurring over time in the structure of consumer demand or in technology which result in some skills being in less demand or even becoming obsolete.It may also be due to a change in the geographic distribution of job opportunities.Cyclical unemployment is the unemployment caused by the recession phase of the business cycle.Economists place special emphasis on this type of unemployment because they believe that economic policy can reduce cyclical fluctuations in the economy and therefore can reduce cyclical unemployment.Seasonal unemployment occurs because some industries (e.g., forestry, fishing, tourism, construction) effectively shut down for part of the year, often due to weather.
What are the economic and non-economic costs of unemployment?
(73) VerifiedUnemployment in excess of the natural rate creates a negative GDP gap that represents lost output and lower incomes and consumption.In addition to these economic costs of unemployment, there are also social costs in the form of loss of skills, decline in self-esteem, family break-ups, racial and ethnic tensions, and health problems.
What is Okun's law? Give an example of how it works.
(78) VerifiedOkun's law refers to the relationship between the unemployment rate and the GDP gap, which was quantified in studies done by the economist Arthur Okun.His studies indicated that for every 1% that the actual unemployment rate exceeds the natural unemployment rate, there is a 2% GDP gap shortfall.If the actual unemployment rate was 8.3% and the natural unemployment rate was 6.5%, then there would be a 3.6% (= (8.3 - 6.5)*2) GDP gap.Thus, the ratio is 1:2 in terms of unemployment rate-GDP gap link.
According to most economists, what is the immediate cause of the business cycle? Give an example of how this causes expansion and contraction in the business cycle.
(84) What is meant by the term business cycle? List the four phases of the business cycle.
(74) What phase of the business cycle is the Canadian and your provincial economy experiencing at the present time? Justify your answer.
(70) What are two criticisms of the unemployment rate? How do these criticisms relate to the overstating or understating of the unemployment rate?
(83) "The economic cost of unemployment is measured by the GDP gap." Explain this statement.
(91) Describe and explain what is meant by clipping coins, from an economic perspective.
(74) "The increasing importance of durable goods has made our economy more vulnerable to cyclical fluctuations." Explain and evaluate.
(89) Explain how policy makers Core Inflation data to assess whether any deliberate changes are in polices aimed at achieving acceptable levels of Inflation.
(77) Define the "full-employment" or "natural" rate of unemployment and give its approximate percentage rate as economists currently define it.
(83) Why might the unemployment rate increase when the economy moves into its recovery phase?
(70) Discuss the unequal burden of unemployment for different demographic groups in Canada.
(76) How does inflation affect the economy's real level of output and why does output change in this way?
(85) 
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