LIM, CHARMAINE ERIKA G. 200911988 BS ARCH BASIC ECONOMICS W/ LRT 1. What is UNEMPLOYMENT?

? Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force. TYPES OF UNEMPLOYMENT a. FRICTIONAL UNEMPLOYMENT "Frictional Unemployment is unemployment between jobs, careers, and locations." that comes from people moving

Sources of frictional unemployment include the following: - People entering the workforce from school. - People re-entering the workforce after raising children. - People changing unemployers due to quitting or being fired (for reasons beyond structural ones). - People changing careers due to changing interests. - People moving to a new unemployed when they arrive. city (for non-structural reasons) and being

b. CYCLICAL UNEMPLOYMENT "Cyclical unemployment occurs when the unemployment rate moves in the opposite direction as the GDP growth rate. So when GDP growth is small (or negative) unemployment is high." Getting laid off due to a recession is the classic case of cyclical unemployment. This is why the unemployment rate is a key economic indicator

c. STRUCTURAL UNEMPLOYMENT "Structural unemployment is a unemployment that comes from there being an absence of demand for the workers that are available." There are two major reasons that cause an absence of demand for workers in a particular industry: Changes in Technology: As personal computers replaced typewriters, typewriter factories shut down. Workers in typewriter factories because unemployed and had to find other industies to be employed in.

Changes in Tastes: If bagpipes become unpopular, bagpipe companies will go bankrupt and their workers will be unemployed.

2. What is INFLATION? How does it affect the economy? Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. The value of a dollar does not stay constant when there is inflation. The value of a dollar is observed in terms of purchasing power, which is the real, tangible goods that money can buy. When inflation goes up, there is a decline in the purchasing power of money. For example, if the inflation rate is 2% annually, then theoretically a $1 pack of gum will cost $1.02 in a year. After inflation, your dollar can't buy the same goods it could beforehand. There are several variations on inflation: Deflation is when the general level of prices is falling. This is the opposite of inflation. Hyperinflation is unusually rapid inflation. In extreme cases, this can lead to the breakdown of a nation's monetary system. Stagflation is the combination of high unemployment and economic stagnation with inflation. developed countries have attempted to sustain an

In recent years, most inflation rate of 2-3%.

Costs of Inflation Almost everyone thinks inflation is evil, but it isn't necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.

Problems arise when there is unanticipated inflation: Creditors lose and debtors gain if the lender does not anticipate inflation correctly. For those who borrow, this is similar to getting an interest-free loan. Uncertainty about what will happen next makes corporations and consumers less likely to spend. This hurts economic output in the long run. People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living.

The entire economy must absorb repricing costs ("menu costs") as price lists, labels, menus and more have to be updated. If the inflation rate is greater than that of other countries, domestic products become less competitive.

People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn't be whether inflation is rising, but whether it's rising at a quicker pace than your wages. Finally, inflation is a sign that an economy is growing. In some situations, little inflation (or even deflation) can be just as bad as high inflation. The lack of inflation may be an indication that the economy is weakening. As you can see, it's not so easy to label inflation as either good or bad - it depends on the overall economy as well as your personal situation.

GOLONDRINA, DAVITH T. 200914204/BS ARCHITECTURE 1. WHAT IS UNEMPLOYMENT Unemployment (or joblessness) occurs when people are without work and actively seeking work. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. During periods of recession, an economy usually experiences a relatively high unemployment rate. According to International Labour Organization report, more than 197 million people globally are out of work or 6% of the world's workforce were without a job in 2012. TYPES OF UNEMPLOYMENT FRICTIONAL UNEMPLOYMENT

"Frictional Unemployment is unemployment that comes from people moving between jobs, careers, and locations." Sources of frictional unemployment include the following: - People entering the workforce from school. - People re-entering the workforce after raising children. - People changing unemployers due to quitting or being fired (for reasons beyond structural ones). - People changing careers due to changing interests. - People moving to a new city (for non-structural reasons) and being unemployed when they arrive. CYCLICAL UNEMPLOYMENT

"Cyclical unemployment occurs when the unemployment rate moves in the opposite direction as the GDP growth rate. So when GDP growth is small (or negative) unemployment is high." Getting laid off due to a recession is the classic case of cyclical unemployment. This is why the unemployment rate is a key economic indicator STRUCTURAL UNEMPLOYMENT

"Structural unemployment is a unemployment that comes from there being an absence of demand for the workers that are available." There are two major reasons that cause an absence of demand for workers in a particular industry:

Changes in Technology: As personal computers replaced typewriters, typewriter factories shut down. Workers in typewriter factories because unemployed and had to find other industries to be employed in. Changes in Tastes: If bagpipes become unpopular, bagpipe companies will go bankrupt and their workers will be unemployed. 2. What is INFLATION? How does it affect the economy? In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation is rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include ensuring that central banks can adjust real interest rates (to mitigate recessions), and encouraging investment in non-monetary capital projects. Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like "pushing on a string". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to changes in the velocity of money supply measures; in particular the MZM ("Money Zero Maturity") supply velocity. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth. Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.