Understanding Unemployment and Capacity Utilization

The video explores the concepts of inflation, deflation, and capacity utilization, emphasizing the difference between industrial and service-based economies. It highlights unemployment as a key measure of capacity utilization in service economies and delves into various unemployment metrics like U-3, U-4, U-5, and U-6. The video also analyzes unemployment data trends, showing the growing gap between U-3 and U-6, indicating increasing economic desperation. The discussion concludes with insights into labor utilization and its impact on wages and prices.

What is a key measure of capacity utilization in a service-based economy?

• Factory output

• Unemployment

• Interest rates

• Inflation rate

What does the U-3 unemployment rate represent?

• Total unemployed as a percent of the civilian labor force

• Total employed as a percent of the civilian labor force

• Total part-time workers as a percent of the civilian labor force

• Total discouraged workers as a percent of the civilian labor force

Which group is included in the U-4 unemployment measure?

• Part-time workers

• Retired individuals

• Discouraged workers

• Full-time workers

What distinguishes a marginally attached worker from a discouraged worker?

• Marginally attached workers are actively looking for jobs

• Discouraged workers are employed full-time

• Discouraged workers have stopped looking due to economic reasons

• Marginally attached workers are employed part-time

What additional group does U-6 include compared to U-5?

• Students

• Retired individuals

• Part-time workers for economic reasons

• Full-time workers

Why is the gap between U-3 and U-6 significant?

• It shows the number of full-time workers

• It tracks the inflation rate

• It indicates the level of underemployment and economic distress

• It measures the number of discouraged workers

How does the current U-6 rate compare to past recessions?

• It is lower than in the early 80s

• It is higher than in the early 80s

• It is the same as in the early 80s

• It cannot be compared due to lack of data

What does a rising U-6 rate suggest about the economy?

• Deflationary pressures on wages and prices

• Decreasing unemployment

• Stable economic growth

• Increasing inflation

What is a pseudo-indicator for U-6 before 1994?

• Number of full-time workers

• Number of part-time workers

• Number of discouraged workers

• Number of unemployed for more than 15 weeks

What economic trend is indicated by low labor utilization?

• Stable inflation

• Increasing employment

• Falling prices

• Rising wages