Chapter 6 Flashcards
Unemployed
individuals who do not currently have a job and are actively looking for one
Employed
Individuals who currently have jobs
Labor force
Labor force = employed + unemployed
Unemployment rate
the number of unemployed divided by the total labor force
Labor force participation
the labor force divided by the popular 16 years of age and older
Discouraged Workers
workers who left the labor force because they could not find jobs
Marginally attached Workers
individuals who would like to work and have searched for work in the recent past, but have stopped looking for work for a variety of reasons; discouraged workers and workers who are not looking for jobs
Individuals working part time for economic reasons
works who would like to be employed full time but hold part-time jobs
Seasonal Unemployment
unemployment due to recurring calendar effects
Cyclical Unemployment
unemployment that occurs during fluctuations in real GDP
Frictional Unemployment
unemployment that occurs with the normal workings of the economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees
Structural Unemployment
Unemployment that occurs when there is a mismatch of skills of jobs
Natural rate of unemployment
the level of unemployment at which there is no cyclical unemployment. It consists of only frictional and structural unemployment.
Full employment
the level of unemployment that occurs when the unemployment rate is at the natural rate
Unemployment insurance
payments unemployed people receive from the government
Consumer Price Index (CPI)
A price index that measures the cost of a fixed basket of goods chosen to represent the consumption pattern of a typical consumer
Problems in Measuring Changes in Price
- All indexes in reality overstate the actual changes in prices
- Government statisticians try to adjust for quality changes
- Cost-of-living adjustments (COLAs)
Cost-of-Living Adjustments
Automatic increases in wages or other payments that are tied to the CPI
Inflation Rate
percentage rate of change of a price index
Anticipated Inflation
inflation that is expected
Menu costs
the costs associated with changing prices and printing new price lists when there is inflation
Shoe-Leather Costs
costs of inflation that arise from trying to reduce holdings of cash
Unanticipated Inflation
inflation that is unexpected
Hyperinflation
an inflation rate exceeding 50% per month
