What factor makes it to determine the unemployment rate?

In order to show up in the unemployment statistics, people need to report that they are looking for work. The reported unemployment rate can therefore drop for two reasons: either because people find jobs or because they stop reporting that they are looking for work (maybe because they are frustrated). The true unemployment rate is therefore difficult to observe.

Why is unemployment rate is an economy problem?

Unemployment is the situation where a person is willing to work and is fit to work at the prevailing rate of wages but still he/she doesn't get work. Structural Unemployment -------------------------------------It occurs due to the structural change in the economy.They are mainly of two types: 1.Change in technology due to which old technology are no longer required and subsequently they become unemployed. 2.Change in the pattern of demands due to which certain industries are shut down and those industrial workers become jobless. Frictional -----------------It occurs due to imperfection in the mobility of workers across different occupations.One wishes to move from one job to another but during this process he may remain or prefer to remain jobless for sometime.This situation is called frictional unemployment. Cyclical --------------It occurs due to the cyclical fluctuations in the economy.Phases of recession,depression,recovery etc are some of the examples of fluctuations.Due to all these fluctuations the producers are compelled to reduce the supply,production and employment.This causes unemployment and hence this type of unemployment is called cyclic unemployment. Unemployment is definitely an economic problem.It indirectly means that there is more supply of laborers against the number of jobs.people remain unemployed and hence can't earn their living which ultimately leads to poverty and malnutrition.It reduces the GDP of a country and is great danger to the security of the country. If the economic growth is not going increase in comparison with the growth of population then Unemployment will remain.So the first and foremost step is to control the population growth and increase the rate of economic growth.

It depends on city to city.If a city is developed then one can find jobs.In some cities there is balanced regional growth which creates employment not only in the urban areas but rural areas too but in some cities due to lack of balanced regional growth unemployment still persists.

Why is it difficult o distinguish between frictional, structural and cyclical unemployment?

There is some overlap between the categories and it can be difficult to classify a worker in one or the other. Frictional unemployment is that level of unemployment so the labor market operates smoothly. It includes unemployed workers like someone who just got out of school and is looking for a first job; or someone who decides to move and needs a new job in a new location, etc. Structural unemployment is unemployment affecting a specific industry or group of workers. It includes people thrown out of work due to adoption of new technology and their skills are obsolete; automation; legal restrictions that reduce production in their industry; etc. Cyclical unemployment is unemployment due to the normal ups and downs in the economy. The difficulties lie in placing an unemployed worker in a certain category -- for instance -- we have discouraged workers (people who are unemployed so long they are no longer considered part of the labor force, but they would work if a job appeared for them), part-time workers are considered employed and yet are they employed the way they wish to be, and there are other potential workers who are not considered to be available for work and yet would like to have a job (eg a 8 month pregnant unemployed woman would find it hard to get a job). What is noneconomic effect of unemployment?

Noneconomic effects can include loss of self-respect, loss of position in a social community, loss of social and political unrest. Explain how an increase in your nominal income and a decrease in your real income might occur simultaneously?

Nominal Income is not 'inflation adjusted' and it sometimes gives you a less realistic numbers while real income is 'inflation adjusted', which obviously caters the inflation rate as well. Yes, increase in nominal income and decrease in real income might occur simultaneously if your nominal income increased by 3% and inflation increased by 5% then actually your real income (nominal income - inflation rate) 3% minus 5% would be in negative. An increase in nominal income leads to an increase in the interest rate. An increase in the supply of money, through open market operations, leads to a decrease in the interest rate.

How does deflation differ from inflation? Both Inflation and Deflation are socially bad, but inflation may be considered to be the lesser of the two evils. Inflation is unjust in its effects on the following counts: 1. Inflation redistributes income in the favour of the rich and the profiteer class at the cost of the poor masses - the wage-earners and consumers. 2. Through its redistributive effects, inflation increases the inequality of income in the community by widening the gulf between higher income groups and lower income groups. The rich become richer and the poor become poorer during inflation. 3. Inflation is regressive in effect in the sense that it hits hard those who are already weak and cannot protect themselves. It is specially the middle class which suffers most due to inflation. 4. Inflation is unjust because it affects different classes of people in society in different ways and different degrees .if inflation were to affect everyone in the society in exactly the same manner and to the same degree, it would not alter the economic and social relationships in the community. But inflation takes away wealth from some people and transfers to others arbitrarily without taking into consideration the sound maxim of social equity. 5. Inflation is also unjust because it breaks public morale. From the point of view of social ethics, inflation is always demoralizing; it introduces the spirit of gambling. It promotes speculation, hoarding, and diverts business skill and efficiency from productive purposes to speculative purposes. 6. Inflation erodes real savings by deterioration in the value of money. 7. Inflation creates money illusion and generates artificial prosperity, which is not permanent. What is consumer price index and how is it determined each month? very month, government economists at the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor release the latest Consumer Price Index (CPI), which is a measure of the average change over time in the price paid by urban households for a set of consumer goods and services. The expenditure items are classified into some 200 categories that are arranged into eight groups (e.g., food and beverages or medical care). The percent change in the CPI provides a measure of inflation. The CPI reflects the spending patterns of each of two population groups: all-urban consumers and urban wage earners and clerical workers, which include professionals, the self-employed, the unemployed, and poor persons. The all-urban group represents about 87 percent of the U.S. population. The price-change experience of the all-urban consumer group is measured by the traditional Consumer Price Index for All Urban Consumers (CPI-U) and the newer Chained Consumer

Price Index for All Urban Consumers (C-CPI-U), the latter of which is closer to a cost-of-living index in that it adjusts for consumers substitutions among expenditure items in reaction to relative price changes. The CPI-W is based on the expenditures of households included in the CPI-U definition that get more than half their income from clerical work and that have at least one earner who has been employed at least 37 weeks during the previous 12 months. The CPIW's population represents about 32 percent of the total U.S. population, and is a subset of the CPI-U. The CPI is used as an economic indicator, a deflator of other economic series, and a means of adjusting dollar values. While sometimes referred to as a cost-of-living index, the CPI differs in important ways from a complete index because it does not take into account changes in other factors that affect consumer well-being and are difficult to quantify, such as safety, health, water quality, and crime. As described on the BLS Web site, alternative price indices lead to significantly different conclusions regarding price changes over long periods of time. These differences affect conclusions regarding time trends in the population of families with incomes below the poverty line. See the Bureau of Labor Statistics Web site for detailed information about the CPI, how its various measures are calculated, and how to obtain CPI statistics. What effect does inflation have on the purchasing power of dollar? Purchasing power" is a term used in economics to refer to the amount of goods and services that can be purchased with a unit of currency or a given amount of currency. The price level of goods and services in the economy determines the purchasing power of the currency. If price levels in the U.S. experience inflation or increase over time, then the purchasing power of the dollar falls. Read more: What Effect Does Inflation Have on the Purchasing Power of a Dollar? | eHow.com http://www.ehow.com/about_7446089_effect-inflation-purchasing-powerdollar_.html#ixzz1NzLeVN00 inflation erodes the purchasing power of the dollar. If you have $10,000 today, but there is 10 percent inflation over the next year, your money will buy 10 percent less than it could have at the beginning of the year. In other words, at the end of the year the purchasing power of your $10,000 will have fallen to $9,000. People often invest money or save money at interest to mitigate or overcome the effects of inflation. For instance, if inflation is 5 percent but you put your money in a savings account that pays 6 percent interest, the purchasing power of your savings will increase by 1 percen

if the cpi was 110 last year and is 121 this year what is this years inflation rate?
-2Suppose an economy's real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP? Assume that population was 100 in year 1 and 102 in year 2. What is the growth rate of GDP per capita? ANSWER: Growth rate of real GDP = 4 percent (= $31,200 - $30,000)/$30,000). GDP per capita in year 1 = $300 (= $30,000/100). GDP per capita in year 2 = $305.88 (= $31,200/102). Growth rate of GDP per capita is 1.96 percent = ($305.88 - $300)/300).8-4What are the four phases of the business cycle? How long do business cycles last? How do seasonal variations and secular trends complicate measurement of the business cycle? Why does the business cycle affect output and employment in capital goods and consumer durable goods industries more severely than in industries producing nondurables? ANSWER: The four phases of a typical business cycle, starting at the bottom, are trough, recovery, peak, and recession. As seen in Table 8-2, the length of a complete cycle varies from about 2 to 3 years to as long as 15 years. There is a pre-Christmas spurt in production and sales and a January slackening. This normal seasonal variation does not signal boom or recession. From decade to decade, the long-term trend (the secular trend) of the U.S. economy has been upward. A period of no GDP growth thus does not mean all is normal, but that the economy is operating below its trend growth of output. ANSWER: Because capital goods and durable goods last, purchases can be postponed. This may happen when a recession is forecast. Capital and durable goods industries therefore suffer large output declines during recessions. In contrast, consumers cannot long postpone the buying of nondurables such as food; therefore recessions only slightly reduce nondurable output. Also, capital and durable goods expenditures tend to be "lumpy." Usually, a large expenditure is needed to purchase them, and this shrinks to zero after purchase is made.8-6Use the following data to calculate (a) the size of the labor force and (b) the official unemployment rate: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 150; unemployed, 23; part-time workers looking for full-time jobs, 10. ANSWER: Labor force = 230 [= 500 - (120 + 150)]; official unemployment rate = 10% [(23/230) x 100]. 8-8Assume that in a particular year the natural rate of unemployment is 5 percent and the actual rate of unemployment is 9 percent. Use Okun's law to determine the size of the GDP gap in percentage-point terms. If the nominal GDP is $500 billion in that year, how much output is being foregone because of cyclical unemployment? GDP gap = 8 percent [=(9-5)] x 2; forgone output estimated at $40 billion (=8% of $500 billion).8-11If the price index was 110 last year and is 121 this year, what is this year's rate of inflation? What is the "rule of 70"? How long would it take for the price level to double if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per year? ANSWER: This year's rate of inflation is 10% or [(121 - 110)/110] x 100.

Dividing 70 by the annual percentage rate of increase of any variable (for instance, the rate of inflation or population growth) will give the approximate number of years for doubling of the variable. What is rule of 70? A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate the number of years for a variable to double, take the number 70 and divide it by the growth rate of the variable. This rule is commonly used with an annual compound interest rate to quickly determine how long it would take to double your money.