lect 7

• What type of unemployment is associated with changes in demand over the business cycle?

  Cyclical
• Cyclical unemployment can be influenced by AD policies.
• What is the term for unemployment caused by turnover in the labor market and natural job dynamism?

  Frictional
• Structural unemployment arises from a mismatch of skills and available jobs.
• What two types of unemployment make up equilibrium unemployment?

  Frictional and structural
• Cyclical unemployment can be reduced by successful AD policies.
• Order the following policies according to their primary target: Cyclical unemployment, Frictional unemployment, Structural unemployment

  1️⃣ Cyclical unemployment: AD policies

  2️⃣ Frictional unemployment: Micro policies

  3️⃣ Structural unemployment: Micro policies
• Restricting the working week is a policy that helps reduce frictional unemployment.

  False
• Protectionism is a policy that does not help reduce unemployment.
• What did the original Phillips curve relate?

  Wage inflation to unemployment
• Unit cost inflation depends on the state of demand.
• When is unit cost inflation positive according to the Phillips curve?

  Y > Y*
• Match the following concepts with their descriptions:

  Original Phillips curve ↔️ Relates wage inflation to unemployment

  Expectations-augmented Phillips curve ↔️ Relates GDP to unit cost inflation

  Y* ↔️ Potential GDP
• The relationship between inflation and unemployment is a key topic in macroeconomics.
• What is the level of unemployment consistent with Y = Y* called?

  NAIRU
• The non-accelerating-inflation-rate of unemployment is also known as NAIRU.
• What happens to inflation if Y is held above Y* and U below U* in the long run?

  Accelerating inflation
• Unemployment reduces output and aggregate income.
• What does the claimant count measure?

  Unemployment-related benefits
• The Labour Force Survey uses a sample of 40,000 people each month.