Unit Two: Notes and Need-To-Knows 2/3/2015

unemployment: number of people in the labour force that do not have a job who don't have a job
labor force: number of people in the country that are classified as either employed or unemployed.
unemployment rate: (# of unemployed) / (Labor Force)
                                                     
WHO ARE NOT IN THE LABOR FORCE:

• 1. kids
• 2. retired people
• 3. military personnel
• 4. mentally insane
• 5. prisoners
• 6. stay at home parents
• 7. full time students
• 8. discouraged workers

full employment is when there is no cyclical unemployment present in the economy. (natural)

WHY UNEMPLOYMENT IS GOOD:
1. less pressure to raise wages
2. more workers are available

WHY UNEMPLOYMENT IS BAD:
1. not enough capital (GDP)
2. too much poverty
3. too much gov. assistance needed

OKUN'S LAW:
for every 1% of unemployment above natural rate of unemployment causes 2% decline in GDP