Describe the alternative measures of unemployment. What distinguishes an unemplo

Question

Describe the alternative measures of unemployment. What distinguishes an unemployed person from one who is not in the labor force? List, define and explain the various types of unemployment. How does the unemployment rate fluctuate over the business cycle? What is the output gut gap? How does irap? How does it change when the economy goes into recession. What is the price level? What is the CPI and how is it calculated? How do we calculate the inflation rate and what is its relationship with the CPI? What are the four main ways in which the CPI is an upward-biased measure of the price level?

Explanation / Answer

Answer 1.

Unemployment rate refers to the degree of unemployment in the economy. It measures the number of people who are actively looking for a job but are unable to find one, divided by the total labor force in the economy.

Although conventionally unemployment is measured by the number of unemployed divided by the current labor force, there are other measures also by which unemployment can be measured in economies to meet different purposes.

Some of them classified by the BLS are:

1.      U-1 Persons unemployed 15 weeks or longer, as a %age of the civilian labor force

2.      U-2 Job losers and people who completed temporary jobs, as a %age of the civilian labor force

3.      U-4 Total unemployed plus discouraged workers, as a %age of the civilian labor force plus discouraged workers

4.      U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force

5.      U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

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