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Introduction to Economics
UNEMPLOYMENT AND
INFLATION
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Four Types of Unemployment1. Frictional unemployment 2. Seasonal unemployment3. Structural unemployment4. Cyclical unemployment
•Full employment: when there is only frictional and structural unemployment Natural rate of unemployment
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Labour Force•People who are:1. Adults (15+)2. Willing to work3. Able to work4. Actively looking for a job (if not working)
Discouraged workers
Labour force = employed + unemployed
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Adult Population vs. Labour Force
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ExampleYou are given the following information about a society:•Adult population: 27,700•Labour force: 18,500•Employed: 17,000
Find:a.Labour force participation rate b.Unemployment rate
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Unemployment & Underemployment•Underemployment:•Overqualified •Willing to work more hours
•Productivity
•Cost of unemployment Economic Non-economic
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Canadian Unemployment by Sex and Age
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Labour Force Participation by Gender
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Rate of Unemployment by Province
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Inflation•Winners vs. losers
Only if unanticipated•Why is inflation bad?•Unplanned redistribution of income•Distortion of price signals•Uncertainty and instability Especially when high → less predictable•Wealth is turned from productive assets into less productive assets