Chapter 20: Unemployment and Inflation Flashcards
labor force
the sum of employed and unemployed workers in the economy
unemployment rate
the percentage of the labor force that is unemployed
discouraged workers
people who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them
labor force participation rate
the percentage of the working-age population in the labor force
frictional unemployment
short-term unemployment that arises from the process of matching workers with jobs
structural unemployment
unemployment that arises from a persistent mismatch between the skills and attributes of workers and the requirements of jobs
cyclical unemployment
unemployment caused by a business cycle recession
natural rate of unemployment
the normal rate of unemployment, consisting of frictional unemployment plus structural unemployment
efficiency wage
a higher-than-market wage that a firm pays to increase worker productivity
price level
a measure of the average prices of goods and services in the economy
inflation rate
the percentage increase in the price level from one year to the next
consumer price index (CPI)
an average of the prices of the goods and services purchased by the typical urban family of four
producer price index (PPI)
an average of the prices received by producers of goods and services at all stages of the production process
nominal interest rate
the stated interest rate on a loan
real interest rate
the nominal interest rate minus the inflation rate
