ECON ch 14- EXAM #1 Flashcards
the number of employed people (EP) and unemployed people (UP)
the labor force (LF)
labor force equation
LF= E+U
U-Rate equation
UP/LF x100
a person must actively be out of a job and currently looking for one
unemployed
the portion of unemployment that is due to the normal working of the labor market (used to denote SR job/skill matching problems)
frictional unemployment
the portion of the unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries
structural unemployment
the increase in unemployment due to recessions
cyclical unemployment
quantity of labor employed in the economy
the quantity of workers
wage rate=
the price of labor
a graph that illustrates the amount of labor that households are willing to supply at each given wage rate
labor supply
a graph that illustrates the amount of labor that firms are willing to employ at each given wage rate
labor demand
classical theory holds that
all markets clear
labor market clear=
a decline in demand for labor will be followed by fall in wage rates
- the equilibrium will be restored at a lower wage rate
- at lower wage, everyone who wants a job will have one
a decline in demand for labor does not necessarily mean that unemployment will rise
classical view
did keynes agree with classical theory
no
