The Economist published an article on September 30, 2000 entitled “The Politics of
Boom”. This article brings up several issues that we have discussed in Economics 103 this
semester. The article discusses the presidential election and both candidate’s positions on some of
the major issues dealing with the economy. Mainly, the article centers around the federal budget
“This year’s presidential election is being fought against the backdrop of an unprecedented
economic boom”. One component of this statement is the unemployment rate at about 4%, which
is close to historic lows. In class, we learned that the different types of unemployment are
frictional (when people quit work to seek more attractive employment), structural (resulting from
technology or geography), and cyclical (associated with the downturn and recession phases of the
business cycle). Also there are underemployed workers who are working at jobs that do not
utilize their productive talents or experience, and discouraged workers who have given up looking
for work after facing many rejections.
The labor force is used in determining the unemployment rate. Those not included in the
labor force are students, retirees, stay at-home parents, people under sixteen years old and people
who are institutionalized. To find the unemployment rate you take the number of workers (labor
force) and subtract discouraged workers. Then you divide the rest of the unemployed by that
number. The natural rate of unemployment (NAIRU- non-accelerating inflation rate of
unemployment) is the rate that is consistent with the rate of inflation.
Also a part of the quotation in paragraph two, is that inflation is still “tame”, though it is
“inching upward”. Inflation is defined as an increase in the price level. Problems with inflation
are distributional effects, transfer payments
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